How to Calculate Adjusted Gross Income Using W2

by K.A. Francis ; Updated March 29, 2018

Let's say you're considering adjusting your contribution to your retirement fund. Knowing your adjusted gross income could help you decide how much to increase or decrease your contribution if you are trying to stay in a particular tax bracket. Or, maybe you're negotiating a raise with your employer. Knowing your AGI before you ask for more money can help you determine how much to ask for.

That said, calculating your adjusted gross income using a W-2 works only if you have the right tax form that lists all possible income and expenses to offset your gross income. Your W-2 tells you how much you earned from an employer. If you have any other income, that will not be included on a W-2.

Look for the Wages

A W-2 has a lot of information in its boxes. You need to know your total wages for the year, and that is found in Box 1 - Wages, Tips and Other Compensation. The amount in this box represents what you earned from that employer during the previous year. If you have more than one W-2, total the amounts from that box on each W-2 to get your total income for the year.

Calculate Expenses and Adjustments

Now that you know how much you made for the entire year, tally your deductions and expenses. The easiest way to do this is by following the list found on a tax return form. If you don't have any expenses, then you're done because your adjusted gross income will be the total from your W-2s. If you plan to itemize or you have self-employment income, use Form 1040. If you might itemize a few things such as mortgage interest or interest paid on your student loans, use Form 1040-A.

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Calculate Adjusted Gross Income Using a Form 1040

Examine the tax form and make sure you have included all of your income. If you received a retirement account distribution, dividends, taxable interest, income from real estate or your business showed either a profit or loss, that income has to be counted before you subtract your expenses and adjustments. Once you have accounted for all your wages and income, tally your expenses and adjustments.

Form 1040 allows you to declare the most expenses, so it's the best form to use if you have a lot of expenses you want to subtract from your income. Expenses include educator expenses, business expenses, the health savings account deduction, moving expenses, the deductible part of self-employment tax, retirement plan contributions, self-employment health insurance deductions, early withdrawal penalty for savings accounts, alimony, IRA deductions, student loan interest, tuition and fees and domestic production deduction activities. Once you have a tally of all your expenses, subtract that amount from your gross income. For example, if your W-2s and other income equal $56,000 and you have $15,000 in allowable expenses, your Adjusted Gross Income would be $41,000 ($56,000 - $15,000).

Calculate Adjusted Gross Income Using a Form 1040A

Form 1040A doesn't have as many income allowances (if you have more than is listed on the form, you'll need to switch to the 1040 form). It also doesn't have as many expenses. That said, you'll calculate the AGI in the same manner. Add up your income and wages, then add the total of your expenses, which include educator expenses, IRA deductions, student loan interest and tuition and fees. Then subtract your expenses from your gross income.

References

About the Author

K.A. Francis is a freelance writer with over 20 years experience, and a small business consultant and jewelry designer. She holds a Bachelor of Arts in English and business administration and a Master of Arts in Adult Education. She has written for "The Einkwell," "Windsor Parent," MomsOnline, Writer's Stew, Lighthouse Venture Group and others. Her jewelry design company, KAF Creations, has been in operation since 1998.

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irs certified copy of tax returngrant deed vs trust deedtaxation defsalary pro rata calculatorapply for hud housing onlinedonate blankets to charitycalculate take home pay hourlybid ask spread percentagelegitimate loans for poor creditirs schedule k-1new york nursing license reciprocityfannie mae conforming loan limitsdividend yield vs annual dividenddo you have to pay taxes on workmans compexemptions on capital gains taxlegally blind tax benefitshow long it takes to get tax refundquit claim deed form missourimarket capitalization rate calculatorfutures dow jonesdifference between platinum and gold credit cardtax lien statute of limitationscomposer salaryinsurable titleball state university act scoresaccrual basis net incomenatwest mortgage underwriting processburial life insurance policyexperian live person phone number401k withdrawal withholdingeasiest credit union to get a car loanhow to cash cashier's checkvystar gift cardalcon reward card balancehealthcare in canada pros and conshow much does speeding ticket affect insurancemonetary board definitionis interest paid on a car loan tax deductiblewhat happens to impounded carsgraded benefit term life insuranceinterest rate compounded quarterlytrue earnings costco amexgeneral ledger closing entriesmueller's roofingcredit card statute of limitations californiaaccrued expenses journalemergency rental assistance njhow much is federal tax on lottery winningsposb bank account balancerules for wage garnishmentcharities that help single mothersland contract laws in michigancan you get food stamps and wichow long does a court judgement stay on credit reportdoes insurance cover hail damage to carnyc ebt customer servicetradeking day trading rulesroe and epshow to assume a va mortgagehow to multiply percentages and whole numbersweekly spending spreadsheetclasses of capital expendituresquick claim deed new mexicoplacing a lien on propertyis chiropractic covered by insurancedividend penny stockswhat is the difference between tax credits and tax deductionswhat does pending transaction mean credit cardhow to cancel purchase on ebaybabysitter pay taxessprint long distance customer servicemanagement fee vs expense ratiowhere do banks sell repossessed houses401k deductionpost closing trial balance will showlost ebt card garedeem disney rewardssynonym of instillnj mortgage assistance1040 alternative minimum taxtracking mileage for tax purposeshow to fill w4 form married
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