How to Calculate Adjusted Gross Income Using W2

by Alia Nikolakopulos ; Updated April 19, 2017

The W-2 form you receive at the end of the year from your employer contains essential information that must be reported on your federal income tax return. Some of the data contained on your W-2 form is used to calculate your federal adjusted gross income (AGI), which is used to determine your federal and state income taxes, as well as your eligibility for most tax credits.

Step 1

Look at box 1 of the W-2 form you received from your employer. The amount shown in box 1 is your taxable income from employment. If you have more than one employer or receive more than one W-2, total the amount from each form and put this in box 1.

Step 2

Report your totals from box 1 of your W-2 on line 7 of IRS Form 1040, Form 1040A or Form 1040EZ.

Step 3

Add any additional income from sources other than W-2 employment. Examples of income from other sources include interest income, unemployment compensation, retirement plan distributions and income from self employment.

Step 4

Subtract deductions you’re eligible to claim, such as student loan interest, moving expenses and the health savings account deduction. The availability of certain deductions varies depending on the version of 1040 form you use. The result after you subtract deductions is your AGI.

About the Author

With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.