Adjusted Gross Income (AGI) Calculator

How to Calculate Adjusted Gross Income (AGI)

Adjusted Gross Income (AGI) is a crucial figure in determining your tax liability. It's the starting point for calculating your taxable income and eligibility for various deductions and credits. This comprehensive guide will walk you through the process of calculating AGI.

AGI Formula

The AGI is calculated using the following formula:

$$AGI = TotalIncome - Adjustments$$

Where:

• TotalIncome = Sum of all income sources
• Adjustments = Sum of all allowable deductions

Calculation Steps

1. Calculate your total income by summing all income sources (wages, interest, dividends, business income, capital gains, etc.)
2. Determine your total adjustments by summing all allowable deductions (IRA contributions, student loan interest, etc.)
3. Subtract your total adjustments from your total income to get your AGI

Example Calculation

Let's calculate the AGI for a taxpayer with the following financial information:

• Wages: $50,000
• Interest Income: $1,000
• Dividends: $500
• Business Income: $10,000
• Capital Gains: $2,000
• Other Income: $1,500
• IRA Deduction: $3,000
• Student Loan Interest: $1,000
• Other Adjustments: $500

Step 1: Calculate Total Income

$$TotalIncome = 50000 + 1000 + 500 + 10000 + 2000 + 1500 = 65000$$

Step 2: Calculate Total Adjustments

$$Adjustments = 3000 + 1000 + 500 = 4500$$

Step 3: Calculate AGI

$$AGI = 65000 - 4500 = 60500$$

Visual Representation

This bar chart illustrates the components of the AGI calculation. The blue bar represents the total income of $65,000, the red bar shows the adjustments of $4,500, and the green bar displays the resulting AGI of $60,500.