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Level 1
posted Apr 13, 2021 12:58:02 PM

Unemployment is included in AGI. I'm not clear as to why?

Hello all,  My AGI for 2019 is now very close to AGI for 2020.  It would be helpful to show the spread/loss between the years.  Unsure why 2020 unemployment benefits are including within AGI (I do understand though UI is considered income) so, maybe that's the answer to the questions overall 🙂

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1 Best answer
Expert Alumni
Apr 13, 2021 1:39:59 PM

Yes - unemployment benefits are part of the Adjusted Gross Income (AGI) calculation.

 

AGI is defined by the IRS as gross income minus adjustments to income.

 

Gross Income

Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income, like unemployment  compensation.

  • If you look at the 1040 return, it includes usual income items on lines 1-6.  [See Screenshot #1, below.]
  • You then have Other income, which comes from the items on Schedule 1.  You can see the Unemployment compensation on line 7 of Schedule 1, with the $10,200 adjustment on line 8.  [Screenshot #2]

So now we have gross income!

 

 

Adjustments to Gross Income

Adjustments to gross income are also found on Schedule 1 in Part II.[Screenshot #2]

 

Put them all together and we have Adjusted Gross Income!

 

 

Screenshot #1

 

Screenshot #2

1 Replies
Expert Alumni
Apr 13, 2021 1:39:59 PM

Yes - unemployment benefits are part of the Adjusted Gross Income (AGI) calculation.

 

AGI is defined by the IRS as gross income minus adjustments to income.

 

Gross Income

Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income, like unemployment  compensation.

  • If you look at the 1040 return, it includes usual income items on lines 1-6.  [See Screenshot #1, below.]
  • You then have Other income, which comes from the items on Schedule 1.  You can see the Unemployment compensation on line 7 of Schedule 1, with the $10,200 adjustment on line 8.  [Screenshot #2]

So now we have gross income!

 

 

Adjustments to Gross Income

Adjustments to gross income are also found on Schedule 1 in Part II.[Screenshot #2]

 

Put them all together and we have Adjusted Gross Income!

 

 

Screenshot #1

 

Screenshot #2