Here’s a tip for all you tax payers out there: Donating money to help reduce the federal debt counts as one of the more unusual charitable tax deductions.
Members of Congress don’t want the federal government to raise taxes to help reduce the ever-growing national debt, which is $16,784,854,240,304 as I write this post. Check out USDebtClock.org to see how much it has already increased.
But if you personally want to go above and beyond the amount you already pay to Uncle Sam to help him pay down what he owes, you can send an additional amount to the Bureau of the Public Debt.
How to hand over more to Uncle Sam
There are two ways to personally help cut the US public debt:
- You can contribute online either by credit card or direct debit from your checking or savings account at Pay.gov.
- Or you can write a check payable to the Bureau of the Public Debt. In the memo section, note that it’s a “Gift to reduce the Debt Held by the Public.” Then mail your check to:
Attention: Dept. G
Bureau of the Public Debt
P.O. Box 2188
Parkersburg, WV 26106-2188
Whichever way you choose to donate to the U.S. Treasury, be sure to follow the regular charitable giving tax rules, including getting a receipt.
And remember, donations are only tax deductible when you itemize.
President’s nondeductible donation:
President Obama has announced that he will return 5% of his $400,000 annual White House salary in a show of solidarity with federal employees who have or soon will be facing unpaid furloughs as part of sequestration.
Those approximately $1,667 monthly payback checks, however, won’t do the prez any good next tax-filing season. The White House also made it clear that he’s not going to count the $20,000 that’s he’s returning to the Treasury as a charitable deduction.
Atlanta-based CPA Jay Starkman, who is also a tax historian, told the WSJ that President Herbert Hoover remitted 20% every pay period in solidarity with federal workers who were suffering pay cuts during the Great Depression. Call it a political stunt, but if it was, it didn’t do much good for his reputation.
To avoid the questionable constitutionality of the move, Hoover had Congress pass a provision in 1932 that legally allowed the rebate.
- Pay down the federal debt and get a tax deduction (dontmesswithtaxes.typepad.com)
- Voluntary debt reduction contributions aren’t going where donors intended (dontmesswithtaxes.typepad.com)
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.