Where Do You Find AGI on Your W-2?

A Form W-2, Wage and Tax Statement, is a document received annually from employers, summarizing an individual’s earnings and taxes withheld. It serves as a record for preparing federal and state income tax returns. Many financial processes and tax calculations, including determining eligibility for various tax benefits, rely on Adjusted Gross Income (AGI). This article explains where information contributing to AGI can be found on a W-2 and what AGI represents for tax obligations.

Locating Income Information on Your W-2

When reviewing your W-2, Box 1, labeled “Wages, tips, other compensation,” is the primary starting point for understanding your income. This amount represents your taxable wages, tips, and other compensation paid by your employer during the tax year for federal income tax purposes. It includes your salary, bonuses, and any taxable fringe benefits. Box 1 forms the basis of your income calculation.

The amount in Box 1 may differ from your total gross earnings, as it excludes pre-tax deductions such as contributions to 401(k) plans, health insurance premiums, and flexible spending accounts. Other boxes on the W-2, such as Box 3 (“Social Security wages”) and Box 5 (“Medicare wages and tips”), also reflect your earnings. These are specifically for Social Security and Medicare tax purposes and may not always match Box 1 due to different taxability rules and wage limits. Box 1 is the figure that directly contributes to the initial calculation of your overall income for federal income tax purposes.

What Adjusted Gross Income Means

Adjusted Gross Income (AGI) is a financial metric used by the Internal Revenue Service (IRS) to determine an individual’s tax liability. It represents your total gross income from all sources, with specific deductions subtracted. AGI helps determine eligibility for various tax credits, deductions, and tax rates.

AGI is not directly listed on the W-2 form. Instead, it is a calculated figure derived from your W-2 wages and other income sources, after applying specific adjustments. While your W-2 provides the primary income component from your employer, the final AGI figure encompasses all taxable income and permissible reductions, reported on your federal income tax return.

How Adjusted Gross Income Is Calculated

Calculating Adjusted Gross Income begins with your total gross income from all sources. This includes wages reported on your W-2 (Box 1) and other taxable income such as interest, dividends, capital gains, business income, rental income, and retirement distributions. From this total gross income, specific “above-the-line” deductions are subtracted. These adjustments reduce your income before your standard or itemized deductions are applied.

Common examples of these deductions include contributions to traditional Individual Retirement Accounts (IRAs), student loan interest payments, deductible Health Savings Account (HSA) contributions, and certain self-employment taxes. For instance, you can deduct up to $2,500 in student loan interest paid annually, or the actual amount paid, whichever is less. Similarly, self-employed individuals can deduct half of their self-employment taxes and health insurance premiums. After accounting for all eligible income and these adjustments, the final AGI figure is found on Line 11 of your federal income tax return, Form 1040.