What is Adjusted Gross Income?

Adjusted Gross Income Reduces Your Taxes Drastically

Is it easy to understand your Adjusted Gross Income?

Yes! This article of AGI-Adjusted Gross Income will undoubtedly help you to understand the AGI in a much easiest way, so read further…..

Knowing your Adjusted Gross Income is extremely important, because it’s a matter of saving your active/passive income and also to obtain loans on your property. The AGI-Adjusted Gross Income is a mix of allowable expenses, spending’s and contributions etc., will reduce your Gross Income and effect your taxes drastically which leads to higher tax refunds.

adjusted gross income

Apart from Tax Savings your Adjustment Gross Income is even important to your Mortgage Lenders, along with your wages your various types of active/passive incomes like: Investments, Interest Income, Dividends, Bonuses, Tips, Commissions, Pensions, Business Income, etc., are also considered to approve higher loan amount.

A proper understanding about your AGI-Adjusted Gross Income, Tax Planning, Tax Savings is highly advisable. Our most satisfied clients who are Citizens of U.S, H1B Visa holders, International Students, Research Scholars are fully planned their taxes by our CPA’s and Enrolled Agents who are available 365 days without any cost. So, the below articles will give your enough understanding about Adjusted Gross Income.

How Your Employer Calculates Your Adjusted Gross Income On W2?

Your employer calculates your Adjusted Gross Income on Box 1 of Form W2, by projecting your entire years Taxable Wages with subtractions for Pretax Contributions on your Form W2., and the deductions are known as employer contributed qualified plans like: 403(b), 401(k), Parking, Dependent Care, Medical Premiums, Flexible Spending Accounts, FICA Taxes etc.

How To Calculate Adjusted Gross Income On W2?

Millions of taxpayers are not aware of Adjusted Gross Income calculation on W2, and this is leading them to calculate the boxes of Form W2 from 1 to 14 for assessing the taxes and tax savings, which is incorrect and inappropriate way of calculating your AGI on W2.

Remember! You should not add Form W2 boxes 1 to 14 for AGI-Adjusted Gross Income because, your Adjusted Gross Income is already to your box 1. So, you need not add the boxes 2-14 once again to box 1, if added then expect an interest and penalty notice from the IRS and State.

In order to avoid Penalty and Interest notices, when your employer issues you with Form W2, a copy of it would be submitted with the IRS for reference. Your submitted tax returns will be cross verified with the form W2 submitted by your employer, if there is any mismatch then IRS would possibly send you accuracy related penalty notice.

Received any penalty or interest notice? Please do not worry because, like our any other client we can help you in resolving the notices and audits without any cost at all, and you can even enjoy our $2,000 worth tax consultations and 21 value added tax service Free of Cost.

The below article will give you an idea about Form W2 boxes 12,13 and procedure to request your employer to withhold appropriate taxes for current and next year Federal and States.

Adjusted Gross Income Through From W4 Submission With Your Employer!

Apart from understanding your employer sponsored contribution deductions on your form W2, you can submit your form W4 with your employer beginning of every year with the details like: Spouses multiple incomes, children or other dependents, standard/itemized deductions etc., for appropriate tax withholding for Federal and State from time to time.

You can ask us your prefilled form W4 for free of cost, you just need to answer our few questions and get your prefilled form W4 and submit it with your employer. The moment you get your form W4 from us you are even covered with our audit support on your all year’s tax returns for free.

How To Find AGI On W2?

You can find your AGI on Box No 1 of your W2, this income is a combination of your Wages, Tips, Compensation and also addition of boxes of 2 to 14. so please do not add boxes 2-14 to box 1 of your w2 once again.

Where Is Your Adjusted Gross Income On From 1040?

You can find your AGI-Adjusted Gross Income on Form 1040-page 1 line no 11, and AGI-Adjusted Gross Income derived from your expenses and contributions of Form 1040 Schedule 1.

How AGI Is Calculated?

Your Adjusted Gross Income of from 1040 Page 1 Line no 11 is originated from Form 1040 Schedule 1, and it is a combination of below mentioned allowable taxes, qualified expenses and deductions. You can claim the below mentioned deductions and expenses even before the tax filing deadline, so get your taxes planned with our Advance Tax Planning tax estimate or your tax return estimate, and the best part is the movement you get our tax estimate you will be covered with our audit support for notices and audits for free of cost.


  • Moving Expenses: Only for Armed Forces
  • Educator Expenses: You can claim the expenses up to $500 if your filing status is Married Filing Jointly, if Single filing status you can claim up to $250 if the working hours are 900 of a school year.
  • Expenses of Performing Artists, Business Expenses of Reservists, etc.: Claim your expenses like: Travel, Car, website, Office Rent, Repairs, Maintenance, Cost of Presentation, etc. on Schedule C of Form 1040.


  • Self-Employment Taxes: If you are a proprietor or partner of a LLC having a Self-Employment Income, then you need to pay Self-Employment taxes in addition to your regular taxes.


  • Self Employed Health Insurance Deduction: You can claim 100% deduction on premiums of Self-Employed Health Insurance for yourself and for your family
  • Self Employed SEP and SIMPLE IRA: SEP Plans- Maximum allowable deduction for the Self-Employed SEP Plans is $61,000 and the contribution should not be more than your 25% Self-Employment earning. SIMPLE IRA- An employee can contribute and deduct taxes up to $14,000.
  • Alimony Paid: Received alimony is taxable and also deductible only for the state of California, and it should be reported to avoid penalties and interest.
  • Contribution towards HSA- Health Savings Account: You can get tax deduction on contributed Health Savings Account for single coverage up to $3,600 but not less than $2,800, for Family the coverage is up to $7,200.
  • Student Loan Interest Deduction: Claim deduction on student loan interest $2,500 as deduction, and the income threshold for single filing status is between $70,000 to $85,000, and for married filing status $1,40,000 to $1,70,000.
  • Tuition and Fees Deduction: Claim your paid tuition fees up to $2,500 as a deduction on your tax returns, and the MAGI-Modified Adjusted Gross Income threshold for single filing status is $80,000 and for Married Filing Jointly Filing Status is $160,000.
  • IRA Deduction: Single contribution of Traditional IRA is $6,000 and each Married couple deduction is $6000. There are income thresholds and filing status limitations to claim the IRS Deduction.

An Individual with less than $125,000 MAGI- Modified Adjusted Gross Income can claim full deduction of $6,000, and partial deduction is allowed if your MAGI is between $125,000 to $140,000.

Married Joint Filers can claim $6,000 each if the MAGI- Modified Adjusted Gross Income for the amount of $198,000, a partial deduction is allowed if the MAGI- Modified Adjusted Gross Income is between $196,000 to $206,000.

Hope you got required details regarding understanding AGI-Adjusted Gross Income, Form W2, tax planning, but there is still uncovered extensive information left. Have our free consultation today by enrolling on our website crescenttaxfiling.com or you can call us on 916-241-4499.

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