How to calculate my adjusted gross income with my last pay stub

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Adjusted gross income, or AGI, can be useful to know for several reasons. For example, eligibility for certain lucrative tax deductions and tax credits is determined by AGI, as is eligibility to contribute to certain types of retirement accounts. (If you’re interested in learning more about retirement accounts or any other type of investing, head over to our Broker Center, where we’ll help you get started.)

If you have not yet received your W-2 from your employer, you can calculate your AGI using information from your last pay stub of the year.

How to calculate AGI
First, locate your cumulative income on your pay stub. This is the total amount you earned before any taxes or deductions were taken from your paychecks.

Once you find that, add up all of your pre-tax deductions for the year. These typically include insurance (health, dental, vision, life, etc.), 401 (k) or other pension contributions, and public transportation costs paid by the employer. Add them together, then subtract from your total earnings.

If you had any other income for the year, such as self-employment or unemployment benefit, add that to the total as well.

Then you will need to add up your deductions. AGI only takes into account a few specific tax deductions, including:

  • Health Savings Account (CSH) contributions
  • Educator expenses (up to $ 250)
  • Eligible moving expenses
  • Contributions to a traditional IRA or other pre-tax retirement account such as a SEP IRA or SIMPLE IRA (remember 401 (k) contributions were already posted)
  • Support payments you paid
  • Half of the self-employment tax
  • Tuition and fees (Note that you can claim a deduction for tuition and fees Where an education tax credit, not both. If you plan to claim the US Opportunity Credit or Lifetime Learning Credit, do not subtract tuition and fees for AGI purposes.)
  • Student loan interest

Again, not all will apply to everyone, and there are a few other less common AGI deductions. However, for the vast majority of taxpayers, the deductions listed here are sufficient to calculate the AGI.

Finally, add up these deductions and subtract them from the total from the previous step. Combining the steps into one formula looks like this:

An example
To illustrate this, let’s say your last pay stub shows total income of $ 60,000 for the year. And, you have the following pre-tax deductions:

Item

Rising

Health insurance

$ 2,500

Other insurance

$ 1,000

401 (k) contributions

$ 5,000

Public transport paid by the employer

$ 500

So your pre-tax deductions total $ 9,000. To put it simply, we will say that you have no other income. And, you are eligible for the following AGI deductions:

Deduction

Rising

Traditional IRA contributions

$ 3,000

Educator’s expenses

$ 250

Student loan interest

$ 1,750

Using this information, you have AGI deductions of $ 5,000. By plugging the numbers into the formula, we calculate an AGI of $ 46,000.

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