How to Calculate and Minimize My Adjusted Gross Income (AGI) for 2023 Tax Year

Thanks for the detailed info! I have a question about the retirement contributions. If I haven't maxed out my 401k for 2023 yet, can I still make contributions now in 2024 that would count for 2023's AGI? And is there a difference between reducing AGI vs reducing taxable income when it comes to standard deduction vs itemizing?

401(k) contributions had to be made through your employer's plan by December 31, 2023, so unfortunately you can't make retroactive 401(k) contributions now for 2023. However, you can still make 2023 contributions to an IRA (traditional or Roth) until the tax filing deadline (April 15, 2024) - but only traditional IRA contributions will reduce your AGI. There's a big difference between AGI reductions and deductions. AGI reductions (above-the-line deductions) happen before you choose between standard or itemized deductions. These directly reduce your AGI. Then after your AGI is calculated, you either take the standard deduction or itemize - these reduce your taxable income but don't affect your AGI. Since many tax benefits are based on AGI thresholds, reducing AGI is generally more beneficial than just reducing taxable income.

Does this tool actually work for regular W-2 employees too or just self-employed people? I work a normal job but also have some dividend income and a small side gig that brings in about $5k annually. Wondering if it would find anything for my situation.

I'm kinda skeptical about these AI tax tools. How accurate is it compared to just talking to a CPA? Does it actually know all the latest tax code changes or is it working on outdated rules? Last thing I want is an audit because some algorithm gave me bad advice.

It absolutely works for W-2 employees, especially those with additional income sources like you described. The tool is particularly good at finding AGI reduction opportunities for people with mixed income types. For your situation, it would analyze the best way to handle that side gig income and might suggest retirement account options based on your full financial picture. The AI is updated with the latest tax code changes and regulations. It's trained on current IRS publications and tax law, so it's actually more up-to-date than many human preparers. But it's not just giving advice blindly - it shows you the specific IRS rules and publications that support each recommendation, so you can verify everything yourself or discuss with your tax preparer. I was skeptical too, but I cross-checked its recommendations with my accountant and they confirmed everything was legitimate.

Wait how does this even work? I've tried calling the IRS like 5 times this month and never got through. Do you still have to talk to the IRS yourself or does someone else do it for you? Confused about how this actually helps with the wait times.

This sounds like BS honestly. The IRS phone system is notoriously impossible to navigate. If this actually worked, everyone would be using it. Also not sure how talking to an IRS agent helps with AGI calculations - they usually just give generic info and tell you to consult a tax professional for specific advice. Seems sketchy.

You definitely still talk to the IRS yourself. The service just navigates the phone system for you and waits on hold so you don't have to. When an agent finally picks up, you get a call connecting you directly to them. It's your conversation with the IRS - Claimyr just handles the frustrating waiting part. I was skeptical about getting useful info from an IRS agent too, but I got lucky and reached someone who was super helpful. They clarified which specific business expenses qualified as above-the-line deductions for self-employed people versus which ones had to be taken on Schedule A. I think it depends on what department you reach and the specific agent's knowledge. I made sure to have very specific questions prepared rather than asking for general advice.

If I open an HSA account now in 2024, can I still make a contribution that counts for 2023? My employer offered a high-deductible plan that I was enrolled in all of 2023, but I never set up the HSA. Would really help if I could still get that AGI reduction.

Yes, you absolutely can! As long as you were enrolled in a qualified high-deductible health plan (HDHP) during 2023, you can open an HSA now and make contributions for the 2023 tax year until the tax filing deadline (April 15, 2024). Since you were enrolled in the HDHP for the entire year, you can contribute the full amount - $3,850 for individual coverage or $7,750 for family coverage. Just make sure to designate it as a 2023 contribution when you make it. This will reduce your 2023 AGI by the full contribution amount. It's one of the few retroactive tax moves you can still make this year to affect last year's taxes.

The Qualified Business Income Deduction (Section 199A) is a bit confusing position-wise. Technically, it doesn't reduce your AGI - it's actually taken after your AGI is calculated but before your taxable income is determined. It's similar to the standard or itemized deduction in that regard. So while it's an amazing deduction that can reduce your taxable income by up to 20% of your qualified business income, it unfortunately won't help lower your AGI for things that are AGI-dependent. Focus instead on retirement contributions, HSA, and other above-the-line deductions to reduce your actual AGI.