How to check your adjusted gross income for tax filing and the third stimulus check
As the Senate prepares to vote on the new stimulus checks, we take a look at how AGI could affect both your direct payment and the upcoming IRS tax returns.
As the long-awaited third stimulus check nears Congressional approval, it looks like the IRS will be in for a busy few weeks at the end of March.
Not only are the IRS responsible for the administration and distribution of over 150 million direct stimulus payments, they are also in the midst of a particularly busy tax season. As it stands the deadline for Americans to complete their 2020 tax returns is 15 April and the tax authority have insisted that they have no plans to push back the national deadline.
IRS has already received 55 million tax returns ahead of April 15 deadline, a huge increase on last year — here’s why https://t.co/LFkIFDjTWW
— MarketWatch (@MarketWatch) March 3, 2021
Both the tax return and stimulus check process lean heavily on filers’ adjusted gross income to establish eligibility, but what is AGI and how can you find out yours?
What is AGI?
The IRS define AGI as “gross income minus adjustments to income”.
To break that down: 'gross income' is the total amount that you receive in a year (including wages, dividends, capital gains, business income, retirement distributions as well as any other income streams); while 'adjustments' covers things like educator expenses, student loan interest, alimony payment and contributions to a retirements account.
When you do your #IRS taxes for the first time and need prior year tax data to validate your tax return, enter ZERO as your AGI. https://t.co/hykfSpFenr pic.twitter.com/AfLsPua0Lt
— IRSnews (@IRSnews) March 1, 2021
Adjustments will not be included in your AGI, so your AGI can not be higher than your Gross Total Income but it can be lower if you have adjustments.
The AGI is a product of your most recent tax filing so married couples who file jointly will have a combined AGI. This means that all incomes and all adjustments will be bundled together to produce a single figure.
Why do I need to know my AGI?
The most pressing financial concern for many at the moment is the fate of the third stimulus checks and for most your eligibility for the payment will be based on your AGI. The income thresholds included in the eligibility requirements relate to your AGI, so will decide how much of the $1,400 payments you are able to receive.
A late amendment to President Joe Biden’s stimulus bill altered the upper threshold to disqualify individuals with an AGI of over $80,000 and couples whose AGI is over $160,000 from receiving any money in the form of a stimulus check. The full $1,400 will be available for individuals whose AGI is below $75,000, or $150,000 for couples.
NEW: Senate will narrow eligibility for stimulus checks under a deal between moderate Dems and Biden.
— Sahil Kapur (@sahilkapur) March 3, 2021
Singles under $75K get the full $1,400. But it zeroes out at $80K (not $100K).
Couples under $150K get full amount. But zeroes out at $160K (not $200K). https://t.co/iNMMppOugZ
Your AGI is also used to calculate what deductions and credits you are available for in your regular tax filing. For example, itemised deductions like medical and dental expenses must be reduced by 7.5% of you AGI for 2020, limiting the amount that higher income earners can claim.
For more information, this handy guide from TurboTax explains how adjusted gross income can affect your tax returns with additional deductions and credits.