Where Is the Adjusted Gross Income on a W-2?
Your W-2 doesn't show AGI. Learn what Adjusted Gross Income is and how to accurately calculate this crucial tax figure for your return.
Adjusted Gross Income (AGI) is not a figure directly found on your W-2 form. The W-2, provided by your employer, details your annual wages and the taxes withheld, serving as foundational information for your tax return. Calculating AGI requires combining W-2 information with other income sources and subtracting specific allowable deductions.
Understanding Your W-2
A W-2 form is a document employers issue annually to report an employee’s taxable wages and the amount of federal, state, and other taxes withheld. Box 1 on your W-2, labeled “Wages, tips, other compensation,” represents your total taxable wages for federal income tax purposes.
Box 3, “Social Security wages,” indicates the portion of your earnings subject to Social Security tax. Box 5, “Medicare wages and tips,” shows the income subject to Medicare tax. Box 1 is the primary starting point from your W-2 for income calculation on your tax return.
What Adjusted Gross Income Means
Adjusted Gross Income (AGI) is a figure on your tax return, representing your total gross income minus specific allowable deductions. The Internal Revenue Service (IRS) uses AGI as a basis to determine your income tax liability. AGI is a calculated amount on your tax return, not a figure provided directly by your employer on a W-2.
This calculated amount influences your eligibility for various tax credits, deductions, and certain government programs. A lower AGI can lead to increased tax benefits and a reduced tax bill. It serves as a foundational step before applying the standard or itemized deductions to arrive at your final taxable income.
Calculating Adjusted Gross Income
Calculating Adjusted Gross Income begins with your total gross income from all sources. This includes the wages reported in Box 1 of your W-2, along with any other income such as interest, dividends, capital gains, rental income, or self-employment earnings. After aggregating all income sources, certain “above-the-line” deductions are subtracted. These deductions reduce your gross income directly and are available whether you take the standard deduction or itemize.
Examples of these “above-the-line” deductions include contributions to a traditional Individual Retirement Account (IRA), student loan interest, and Health Savings Account (HSA) contributions. Other potential deductions include educator expenses, certain self-employment tax deductions, and penalties for early savings withdrawal. Your tax preparation software or tax professional will guide you through applying these adjustments to arrive at your final AGI, which is reported on Line 11 of Form 1040.