What's your AGI?
Adjusted gross income (AGI), or your income minus deductions, is important when calculating your total tax liability. It not only determines your tax bracket, but also tells you which credits you qualify for and how much you're able to contribute each year to your tax-deferred retirement accounts. Indeed, itemized deductions including medical expenses and charitable contributions, begin phasing out this year once your AGI reaches $132,950 for taxpayers who are single or married filing jointly and $66,475 for married taxpayers filing separately. Here's how to calculate your AGI.
1.) Determine your gross income
Wages, salary, tips:
Capital gains (losses):
Total IRA distributions - only the taxable amount:
Pensions, annuities - only the taxable amount:
* Include as "other" any income you may have received from your business; alimony; unemployment compensation; rental real estate; royalties, partnerships, S corporations and trusts; farm income; and any taxable Social Security benefits. Also include taxable refunds, credits, or offsets in state and local income tax.
Gross income does not include gifts and inheritances, tax-free Social Security benefits and tax-free interest from state or local bonds.
2.) Deduct the following items:
Student loan interest:
One-half of self-employment tax:
Self-employed health insurance contribution:
Contributions to SEP, SIMPLE and qualified plans for yourself:
** Include as "other" any alimony paid, deductions for Archer Medical Savings Accounts, and penalties paid on early withdrawal of savings.Source: money.cnn.com