How to calculate AGI (Adjusted Gross Income) correctly?
Title: How to calculate AGI (Adjusted Gross Income) correctly? 1 Ok so I'm really confused about calculating my AGI and can't seem to get a straight answer anywhere. My understanding is that AGI is your gross income minus deductions, right? For example: Let's say my gross income is $220k. I have around $75k taken out in total taxes. And then I have about $9,300 taken out for various deductions. So would my AGI = $210,700 (gross income minus deductions)? Or would it be $135,700 (gross income minus taxes and deductions)? Also, I'm not sure if it matters whether the deductions are pre-tax or post-tax? Does AGI include ALL deductions or just certain ones? I feel like this should be simple but every website I check seems to explain it differently!
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Carmen Lopez
14 AGI (Adjusted Gross Income) is your total gross income minus specific adjustments to income, but not minus taxes paid. Taxes aren't deductions for AGI purposes - they're completely separate. In your example, if your gross income is $220k and you have $9,300 in eligible adjustments to income (like traditional IRA contributions, student loan interest, HSA contributions, etc.), your AGI would be $210,700. The $75k in taxes doesn't factor into the AGI calculation at all. That's money being withheld to pay your tax liability, but it doesn't reduce your AGI. As for pre-tax vs post-tax deductions, only certain pre-tax deductions reduce your AGI (the ones called "adjustments to income" on Form 1040). Other deductions like the standard deduction or itemized deductions come AFTER calculating AGI and reduce your taxable income, not your AGI.
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Carmen Lopez
•6 Thanks, that makes sense! So which common pre-tax deductions actually count as "adjustments to income" that would lower my AGI? Does my 401k contribution count?
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Carmen Lopez
•14 Great question! Yes, traditional 401(k) contributions do reduce your AGI because they're pre-tax deductions. Other common adjustments to income include: traditional IRA contributions (with income limits), HSA contributions, student loan interest (up to $2,500), certain educator expenses, and self-employed health insurance premiums. Keep in mind that Roth 401(k) contributions don't reduce your AGI since they're made with after-tax dollars. Also, things like health insurance premiums paid through an employer plan reduce your W-2 income (box 1) but are handled differently than direct AGI adjustments.
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Carmen Lopez
5 I was confused about AGI calculations for YEARS until I found taxr.ai (https://taxr.ai). Seriously changed my life when it comes to understanding these calculations. I uploaded my tax documents and it broke down exactly how my AGI was calculated, showing which deductions actually counted toward reducing AGI versus which ones only reduced taxable income. For me, I had been miscalculating by including my itemized deductions in my AGI calculation, which was throwing everything off for income-based programs. taxr.ai clearly separated the "above-the-line" deductions that affect AGI from the "below-the-line" deductions that don't.
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Carmen Lopez
•9 Does it actually explain WHY certain deductions count and others don't? That's my biggest frustration... just a list of what counts doesn't help me understand the logic.
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Carmen Lopez
•12 I'm skeptical... there are free calculators everywhere online. What makes this worth paying for vs just using the IRS website or TurboTax's free calculator?
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Carmen Lopez
•5 Yes, it actually explains the reasoning behind which deductions affect AGI and which don't. It breaks down the difference between "above-the-line" deductions (which reduce AGI) and "below-the-line" deductions (which reduce taxable income but not AGI). The explanations helped me finally understand the logic behind the tax code structure. The difference from free calculators is that it analyzes your specific documents and situations rather than generic examples. It identifies opportunities you might miss and explains how different financial decisions would impact various parts of your tax situation, not just the final number you owe.
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Carmen Lopez
12 Just wanted to follow up on my skeptical comment. I actually tried taxr.ai and I have to admit it was eye-opening. I've been doing my taxes for 15 years and never fully understood AGI calculations until now. What surprised me was the personalized analysis of my specific situation. It found a student loan interest deduction I qualified for that does reduce AGI (I thought all education expenses were only tax credits). This actually matters a lot since I'm near an income threshold for another benefit. Turns out I've been calculating my AGI wrong for years!
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Carmen Lopez
18 If you're also frustrated trying to get AGI answers directly from the IRS, I feel your pain. Spent 3 hours on hold trying to confirm if my specific deductions were affecting my AGI calculation. Finally found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes! They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent was able to review my situation and confirmed exactly which of my deductions were considered "adjustments to income" for AGI purposes. Saved me a lot of guesswork and potential errors.
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Carmen Lopez
•21 Wait so this service just helps you get through to the IRS faster? How does that even work? The IRS phone system is a disaster.
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Carmen Lopez
•11 Yeah right. Nothing gets you through to the IRS faster. Their hold times are infamous. I'll believe it when I see it.
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Carmen Lopez
•18 It basically navigates the IRS phone tree for you and holds your place in line. When an agent becomes available, it calls you and connects you. It's not magic - you're still talking to the same IRS agents, just without the hours of hold time. They use a system that continuously redials and navigates the menu options until it gets through, something most people don't have time to do manually. Once they get a human, they call you and connect the call.
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Carmen Lopez
11 I'm eating my words here. After being completely skeptical, I tried Claimyr out of desperation because I needed AGI clarification before filing. Got connected to an IRS rep in about 20 minutes when I had previously wasted two afternoons trying. The agent confirmed that my health insurance premiums through my employer were already excluded from my W-2 Box 1 wages (reducing AGI automatically), but my HSA contributions needed to be deducted separately on Schedule 1. This was exactly the confusion I had. This saved me from potentially claiming the same deduction twice. Worth every penny just for the time saved.
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Carmen Lopez
3 Another important point - your AGI affects A LOT of other things on your tax return! It can determine eligibility for certain credits, deductions, and even things like student loan repayment plans or Medicare premiums. For example, I learned that reducing my AGI by increasing my traditional 401k contributions helped me qualify for the student loan interest deduction, which I was previously phased out of. Calculating it correctly is super important!
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Carmen Lopez
•7 How much does AGI affect the amount of taxes taken out of your paycheck each month? I feel like I always owe more at tax time, even when I claim 0 allowances.
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Carmen Lopez
•3 Your AGI doesn't directly affect the taxes taken out of your paycheck. Your paycheck withholding is based on the W-4 form you fill out and the withholding tables your employer uses. If you consistently owe at tax time, you might need to update your W-4 to have additional withholding taken out. The 2025 W-4 doesn't use allowances anymore - instead, you can specify an additional dollar amount to withhold from each paycheck. Another option is to make quarterly estimated tax payments if you have significant income not subject to withholding.
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Carmen Lopez
16 PSA: Taxable income ≠ AGI ≠ Modified AGI (MAGI) I spent hours trying to figure out why I didn't qualify for a Roth IRA contribution even though my "income" seemed under the limit. Turns out: 1. AGI = Gross income - adjustments (401k, HSA, etc) 2. MAGI = AGI + certain deductions added back (like student loan interest) 3. Taxable income = AGI - standard/itemized deduction They're all different and used for different purposes! The one that matters for Roth IRA eligibility is MAGI, not AGI.
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Carmen Lopez
•13 This! And don't forget about state AGI calculations which might be different from federal. I got audited by NY state because their AGI calculation didn't match federal, and I had used the federal number for state tax calculations.
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