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Your Take: What If You Paid Public Debt but Owe Income Tax?
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My friend Rob asked me an interesting question the other day – “Say you underpaid your taxes one year, but you were one of those nutjobs that sends money directly to the office to reduce the national debt. if you sent in the same or a greater amount than you owed, could you claim that you had paid the government in full?”
With the public debt at around $16 trillion (and by around I mean $66 billion over $16 trillion at the time of this writing), you might be tempted to chip in a few bucks by mailing a check to the Bureau of the Public Debt. My answer to Rob’s question is that the nutjob would be out of luck. When you pay down public debt, you mail a check to the Bureau of Public Debt, a bureau of the Department of the Treasury, for the express purpose of paying down the debt. When you pay down the debt, the money actually goes into a fund and is considered a gift. When you mail in your tax payment, it’s made out to the Department of the Treasury and you’re paying down your personal debt/obligation.
I asked Kay Bell, of Don’t Mess with Taxes, and she confirmed that it was a gift and it won’t offset your tax liability. That said, you could (and should) claim it as a donation tax deduction which would lower your liability if you itemize deductions.
What do you think?
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Very interesting, I didn’t even know there was a place you could explicitly send money to pay down the debt.
So we just need to have every single person pay $52,000 along with their taxes for the year (So a family if 4 would pay $208,000) we could no longer focus on the national debt as a scapegoat. (Well at least until the next fiscal year then we all have to send in another $3250).
Seems like a very, very small drop in the bucket. Wouldn’t it make more sense to invest in yourself or others to help create more production and prosperity?
Making a donation to the U.S. Government is not the same as paying your taxes and should not be allowed to be used as an offset.