Being a citizen of any country, it is your duty to pay the taxes on time with honesty. If you filed the taxes before and you are not the newbie then you will not face any problem but if you are a newbie then here are some tips that can help you and a free AGI calculator that will help you to calculate your adjusted gross income.
Your tax return totally depends on the form that you file or before you reach at any point that how much you should pay then AGI is the first thing you need to calculate.
IRS is the government organization with that no one wants to be in the fight with. According to the laws of the USA you need to be precise about reporting all your assets if you do not want to be in any trouble.
Let us take a look
Conclude Your AGI
It will be a total waste of a time if you do not know what are you eligible to file the taxes or a not if you are calculating AGI without knowing anything. There are certain criteria to file the taxes or that determines that you are eligible to file the taxes. There is the IRS website that you can visit to check that you need to pay the taxes or a not and yes then how much you need to pay and the procedure.
Get Your Income tax Documents
The main thing Is that you have to report all your income and wages you have under your name. If you are a business owner then you need to feel the W-2 form and if you are employed then you have to prepare 1099-DIV form. There are some other taxable things you need to add.
- Tex credit and refund + Local Taxes
- Income from Business
- Stock Exchange Loss or gain
- Income from farming
- Compensation if you are unemployed
- Social benefits
- Nonreporting taxable income
Total of those above points will give your total income
Below is the formula to calculate it
Adjusted Gross Income (AGI) = Gross income – Adjustments
Taxable Income = Adjusted Gross Income – Exemptions – Deductions
Deduction and Expenses
Divide some certain amount with the total amount to get the AGI, get below mention details to do that
- For a student, it is Educator expense up to $250
- Business fees for some government bodies
- Health-related deduction
- An expense for changing the house
- Health insurance deduction
- Student loan deduction
- Tuition fees
- Domestic production
If you itemize deductions and report medical expenses, for example, you must reduce the total expense by 8.5 percent of your AGI for tax years 2017 and 2018. So if you report $12,000 in medical expenses and an AGI of $120,000; you must reduce your deduction by $10,200. But if your AGI is $50,000, the reduction is only $2,250.
Do not conflict Between MAGI and AGI
New taxpayers made the mistakes where they use AGI instead of that they need to use modifies AGI. AGI actually determine the taxes that you owe to the government or credit that you get. Your modified AGI will help you to get IRA or to contribute to Roth IRA.
Hire the professional to get it done
If you have that much time to file the taxes or you know the guidelines to file the taxes then you try to do it by yourself but if not then it is advisable to hire the professional person who can do it for you. They can file the taxes error free and if some problem occurs then they will deal with it. Therefore, it is advisable to work with a professional.
After reading the above points you will feel that calculating, AGI is a cup of a tea but let me tell you, my friend, if you follow all the guideline of the IRS then also it is highly possible you made a costly mistake and you end up going in a court. SO to find the Best CA you can get to all the things done