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Updated for Tax Year 2014. OVERVIEW. The AGI calculation depends on the tax return form you use; some forms allow you to take more adjustments to income, than others. When you file a tax return, you will always see a line to figure out your adjusted gross income, or AGI, before arriving at your taxable income number.
The formulas start by calculating total income figures for the student and parents. Total income is the sum of adjusted gross income (AGI) and untaxed income. Financial aid formulas start with AGI, as reported on the previous yearâs federal income tax return, because it is easy to verify. Reduce adjusted gross income through exclusions from income that are not reversed by the financial aid formulas, such as the student loan interest deduction, tuition and fees deduction, employer-provided health insurance, health savings accounts and flexible spending arrangements (cafeteria plans).