What Is Adjusted Gross Income?
Adjusted Gross Income is simply your total gross income minus specific deductions. Additionally, your Adjusted Gross Income is the starting point for calculating your taxes and determining your eligibility for certain tax credits and deductions that you can use to help you lower your overall tax bill.
What Is AGI?
Adjusted Gross Income, or AGI, starts with your gross income, and is then reduced by certain “above the line” deductions. Which deductions are those? That will vary by the tax form you use. For example, Form 1040 allows you to deduct health savings account contributions, but Form 1040A and Form 1040EZ do not. In fact, the 1040EZ does not allow you to claim any adjustments.
“So, What Is Adjusted Gross Income on Your W2?”
The answer is – it’s not. However, we’ve heard this question before as taxpayers ask for help with their taxes. Let’s face it, tax terminology can get a little confusing. When it comes to talking about income, there are several terms that sound similar but they have their own definitions and purposes. Understanding a bit more about these terms can help us better understand what Adjusted Gross Income is and what it isn’t.
- Gross Income – This includes all income received from all sources, and could include money, property, and the value of services received. Gross income is reduced by adjustments and deductions before taxes are calculated. Wages, tips, interest, dividends, rents and pension income are examples of sources that contribute to your gross income.
- Taxable Income – This is your AGI minus either the standard deduction or total of itemized deductions—whichever is greater. Your taxable income is what you’ll use to determine your tax bracket. Note, with changes from the Tax Cut and Jobs Act, personal and dependent exemptions were eliminated from 2018 through 2025.
- Modified Adjusted Gross Income (MAGI)– This is your AGI plus a few adjustments added back in. Your Modified Adjusted Gross Income determines your eligibility for certain deductions, credits and retirement plans. Take note: there’s no fixed definition of MAGI as the adjustments vary, depending on the specific tax benefit.
Finding Your Prior-Year AGI
Your prior-year AGI can be used to validate your electronic return with the IRS. To locate your Adjusted Gross Income from the previous year, you’ll need a copy of last year’s return. For 2017, you can find the amount listed on the following lines based on the form you used.
- If you filed Form 1040, your AGI will be listed on line 37.
- If you filed Form 1040A, your AGI will be listed on line 21.
- If you filed Form 1040-EZ, your AGI will be listed on line 4.
Need to Know More about Adjusted Gross Income?
Still have questions about Adjusted Gross Income? Our Tax Pros can help. They’re dedicated to knowing the nuances of taxes and can help you understand your return.
Make an Appointment to speak with a Tax Pro today.
Wondering if pell grants, student loans and work study programs are taxable? Join H&R Block as we explain the tax consequences of federal student aid programs.
If you report income earned in a nonresident state on your resident and nonresident return, will you be double-taxed? Learn more from the tax experts
Learn more about the definition of a 401(k) plan with information from H&R Block. We break down 401(k) rules with easy-to-follow explanations and lists.
Learn more about the sales expenses associated with the sale of stock and how to report it on the tax form 1099-b from the tax experts at H&R Block.