How to check your adjusted gross income for the tax return and the third stimulus check
As the long-awaited third stimulus check nears congressional approval, it looks like the IRS will be here for a busy few weeks at the end of March.
Not only is the IRS responsible for the administration and distribution of more than 150 million direct stimulus payments, they are also at the heart of a particularly busy fiscal period. As it stands, the deadline for Americans to file their 2020 tax returns is April 15 and the tax administration have insisted that they have no plans to push back the national deadline.
The IRS has already received 55 million tax returns before the April 15 deadline, a huge increase from last year – here’s why https://t.co/LFkIFDjTWW
— MarketWatch (@MarketWatch) March 3, 2021
The tax filing and stimulus check process relies heavily on filers’ adjusted gross income to establish eligibility, but what is AGI and how can you find yours?
What is AGI?
The IRS defines AGI as “gross income minus adjustments to income”.
To break this down: ‘gross revenue’ is the total amount you receive in a year (including salaries, dividends, capital gains, business income, pension distributions, and any other income streams); while ‘adjustments’ covers things like educator expenses, student loan interest, child support payments, and contributions to a retirement account.
Adjustments will not be included in your AGI, so your AGI cannot be greater than your total gross income but it can be lower if you have adjustments.
The AGI is a product of your most recent tax return, so married couples filing jointly will have a combined AGI. This means that all income and adjustments will be aggregated to produce a single figure.
Why do I need to know my AGI?
The most pressing financial concern for many right now is the fate of third stimulus checks and for the most part your payment eligibility will be based on your AGI. The income thresholds included in the eligibility requirements relate to your AGI, so you will decide how much of the $1,400 payments you can receive.
A late amendment to President Joe Biden’s stimulus bill changed the upper threshold for disqualification individuals with an AGI over $80,000 and couples with an AGI over $160,000 to receive money in the form of a stimulus check. The full $1,400 will be available for people with an AGI of less than $75,000, or $150,000 for couples.
NEW: The Senate will reduce eligibility for stimulus checks as part of a deal between moderate Democrats and Biden.
Singles under $75,000 get the full $1,400. But that comes down to $80,000 (not $100,000).
Couples under $150,000 receive the full amount. But zero at $160,000 (not $200,000). https://t.co/iNMMppOugZ
— Sahil Kapur (@sahilkapur) March 3, 2021
Your AGI is also used to calculate deductions and credits you are available in your regular tax return. For example, itemized deductions such as medical and dental expenses must be reduced by 7.5% of your AGI for 2020, which limits the amount high 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.