Last week, S.2320, a bill that would create Universal Savings Accounts in the federal tax code, was referred to the Senate Finance Committee. The bill, sponsored by Senator Jeff Flake and Representative Dave Brat, would...
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- Pitching in to Help Reduce Public Debt
Pitching in to Help Reduce Public Debt
With the April 17th tax deadline looming, Americans are feeling the weight of their annual income tax burden. But there's a quirk of the federal tax code that may actually entice taxpayers to pay a little extra to Uncle Sam this year: the ability to write a special check to help pay down U.S. public debt along with their tax return.
Each year a handful of Americans take advantage of this oddity in the tax code, voluntarily sending debt-reduction checks to the IRS along with their regular tax return. It's no surprise few taxpayers take advantage of it, since it's not well advertised by the IRS. There's no line on the 1040 form for "public debt reduction." However, the IRS website offers detailed instructions for those inclined toward charitable gifts to Uncle Sam's debt-relief fund:
How do you make a gift to reduce debt held by the public?
If you wish to do so, make a check payable to “Bureau of the Public Debt.” You can send it to: Bureau of the Public Debt, Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you file.
Tip: You may be able to deduct this gift on your 2006 tax return.
According to the most recent IRS Data Book, last year 48 taxpayers mailed in contributions to reduce the public debt, for a total of exactly $21,179. That's $441 per gift. Since 1982, there have been a total of 16,122 voluntary contributions to reduce the debt, for a grand total of $9.8 million—or about 0.00012 percent of the nation's public debt of $8,367,661,575,868 as of March 29, 2006 according to the U.S. Treasury.
Here's a table summarizing public-debt contributions from the 2005 IRS Data Book:
Update: The data above only include gifts to reduce public debt made by those filing federal individual income tax returns. Gifts can also be made without filing returns. According to the Bureau of Public Debt, the total gifts toward public debt are much higher than the totals from the IRS Data Book above. In 2005, total gifts to reduce public debt—including donated cash, bonds and property—were $1,455,541.65, much higher than the $21,179 from individual tax returns listed above. See here for more.
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