Your adjusted gross income (AGI) measures your taxable income after accounting for certain deductions know as adjustments to income. The Internal Revenue Service classifies deductions as either adjustments to income or itemized deductions. Some deductions and tax credits, such as the mortgage insurance premiums deduction, are only available if your AGI does not exceed the annual limit. Therefore, knowing your AGI helps you find all the income tax breaks you are eligible to claim.
Add up all of the taxable income you and your spouse have for the year. This includes salaries, interest income and bonuses. Do not include tax-free income, such as tax-free bonds that you may own. For example, if you have $45,000 in taxable income and your spouse has $50,000, your total taxable income is $95,000.
Calculate the adjustments to income you can claim for yourself and your spouse. Adjustments to income do not include exemptions for your children, your standard deduction or any itemized deductions. Adjustments to income include deductible IRA contributions, educator expenses, health savings account contributions, half of your self employment tax, moving expenses, tuition and fees, student loan interest and alimony paid. For this example, if you claim a $4,000 deductible IRA contribution, and your spouse claims a $2,000 student loan interest deduction, your total adjustments to income equal $6,000.
Subtract your total adjustments to income from your total taxable income to find your family's AGI for the year. In this example, subtract $6,000 from $95,000 to find your family's AGI equals $89,000.
You can also find your AGI on line 4 of your tax return if you use Form 1040EZ, line 21 if you use Form 1040A, or line 37 if you use Form 1040.
- IRS.gov: Definition of Adjusted Gross Income
- IRS.gov: Topic 450 - Adjustments to Income
- IRS.gov: Form 1040 Instructions
- IRS. "Schedule 1: Additional Income and Adjustments to Income." Accessed Oct. 22, 2020.
- IRS. "Topic No. 450 Adjustments to Income." Accessed Oct. 22, 2020.
- IRS. "Topic No. 501 Should I Itemize?" Accessed Oct. 22, 2020.
- Wish.org. “How the CARES Act Impacts Charitable Giving for 2020.” Accessed Oct. 23, 2020.
- IRS. "Topic No. 500 Itemized Deductions." Accessed Oct. 22, 2020.
- IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2020." Accessed Oct. 22, 2020.
- IRS. "Publication 972 (2019), Child Tax Credit and Credit for Other Dependents." Accessed Oct. 22, 2020.
- IRS. "Publication 596 (2019), Earned Income Credit (EIC)." Accessed Oct. 22, 2020.
- IRS. "Credits and Deductions for Individuals." Accessed Oct. 22, 2020.
- You can also find your AGI on line 4 of your tax return if you use Form 1040EZ, line 21 if you use Form 1040A, or line 37 if you use Form 1040.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."