How to Calculate Adjusted Gross Income Using W2
Original post by Alia Nikol of Demand Media
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.
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.
Report your totals from box 1 of your W-2 on line 7 of IRS Form 1040, Form 1040A or Form 1040EZ.
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.
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.
- IRS.gov: Definition of Adjusted Gross Income
- IRS.gov: Form W-2 (PDF): 2011
- IRS.gov: Form 1040 (PDF): 2010
- IRS.gov: Publication 17: Wages, Salaries and Other Earnings: 2010
About the Author
With a background in taxation, Alia Nikol specializes in business and personal finance topics. She is an IRS enrolled agent pursuing a Bachelor of Science in accounting and journalism at Metropolitan State College of Denver.