America’s Expenses, Income & Debt for 2016

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In 2016, the federal government spent $3.8 Trillion to pay its bills (I.e. Military, Social Security, Medicare/Medicaid, Education etc.). Here’s how much of it was spent:

* Medicare/Medicaid  – $1.1 Trillion

* Social Security  – $976 Billion

* Dept. of Defense  – $565 Billion

* Dept. of Treasury INTEREST ONLY on our Debt – $429 Billion

Those four “items” alone account for roughly $.80 for every $1 spent by the federal government.

The other roughly $.20 combined spending goes for everything else including Education, Veterans, Homeland Security, Housing & Urban Development, Transportation, Energy, Agriculture, Environmental Protection.

Department of Treasury related link

Income

The federal government also collected roughly $3.2 Trillion from taxpayers (I.e. Your paycheck).

Here’s the breakdown

Debt

Finally, over the years, the federal government has borrowed money to take care of its needs. Currently, it owes over $19.8 Trillion on its “credit cards” and “loans” combined (national debt).

Here is a real time total of what the federal government owes and who it owes it to.

As stated earlier, in 2016, the federal government used the taxes we paid to pay $429 Billion in INTEREST ONLY on the total amount it owes.

Here’s how much the national debt has grown since 2000:

debt.jpg

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Ten Things to Know About the Child and Dependent Care Credit

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Child care is expensive. Month in and month out, parents across the country work hard to pay for childcare. Thankfully there is some tax relief from the government.

Lawmakers years ago recognized that parents needed some sort of relief from the childcare cost burden. The relief caps out at a certain amount and it doesn’t cover every dollar spent but it does help some.

Here’s IRS guidance on how to take advantage of the child and dependent care credit:

Ten Things to Know About the Child and Dependent Care Credit

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.

  1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
  2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
  3. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
  4. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
  5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
  6. The qualifying person must have lived with you for more than half of 2010. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See Publication 503, Child and Dependent Care Expenses.
  7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.
  8. For 2010, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
  9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
  10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. See Publication 926, Household Employer’s Tax Guide.

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Mike & Karen Pence’s 2006-2015 Full Tax Returns

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Mike & Karen Pence’s 2006-2015 Full Tax Returns:

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

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Bill & Hillary Clinton’s 2015 Full Tax Return

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Bill & Hillary Clinton’s 2015 Full Tax Return:

2015 Tax Return

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Total 2015 Federal Government Spending

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Here is everything for 2015 that the federal government spent on (actual, column 4), with the money they took out every one of your paychecks:

https://www.treasury.gov/press-center/press-releases/Documents/Outlays%20By%20Agency.pdf

 

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Married? File Taxes Jointly

Taxes_DueDuring a recent tax filing season, a new tax client of mine openly cried at my desk because of her newly discovered $8,800 tax bill to the IRS and $2,200 tax bill to New York State. All primarily because she filed her taxes “married filing separately” instead of “married filing jointly” with her husband.

Married Filing Separately

Federal and state governments want legally married couples to file their taxes together and to encourage them governments don’t allow certain credits, deductions and exemptions for couples who file “separately.” It also puts couples who file “separately” in a higher tax bracket then those who file “jointly.”

Taxes for 1099 Independent Contract Work

My client also got the new tax bills because she worked as a 1099 independent contractor during the year outside of her normal 9-5 and did not pay taxes on that income throughout the year. $18,000 worth of self employment income.

W4 Exemptions/Allowances

To cap off her problems and to make matters worse, her job in the social services field did not take out enough in taxes every paycheck to meet her tax obligations for the year. Had she simply put zero or one on line 5 of her W-4 form, her employer would have taken out more each paycheck to meet her tax obligation.

Tax Solutions

To make my client’s life better going forward, I gave her a number of recommendations. First, I talked with her about the differences between filing separately and filing jointly. She’s going to try to work with her husband on that. Next, I gave her the necessary paperwork she’ll need to pay her estimated taxes for her self-employment.

Then, I told her to talk with her employer about changing her exemptions/allowances so she can make them as low as possible. That way more taxes are taken out of her paycheck then needed. Finally, I gave her the websites for the IRS and New York State to work out a payment plan for her outstanding debt. With all of this hopefully we’ll have a much better tax prep experience next year.

 

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Make Political Donations Part of Your Financial Plan

Do you make giving to politic47152wn6unnf73bal campaigns part of your overall financial plan? Government plays a critical role in our daily lives. The scope of that role can include monitoring the quality of the air that we breathe, maintaining the strength of the military that protects us or funding the care provided by Medicare and Medicaid. Government also strikes partnerships with the business community to help meet our collective needs.

What do You Want Government to Do?

For many Americans, the critical role of government and their relationship with business is a great association. They believe it’s a link that should continue into the future and evolve to meet the countless needs of our democracy. Others however think that role should be reduced as much as possible.

Whatever a voter’s belief in the role of government, it is a system that needs financial support. Support that is needed at the local, state and federal level.

Plan Political Donations like other Life Goals

Like planning for college, retirement or starting a business, political giving can fit in the financial planning of American voters. The giving can be done on a periodic basis or on an occasional basis. Regardless of how it’s done though putting together a plan with a financial advisor can go a long way in enhancing not only the lives of the giver but the efforts of the candidate they support.

Contributors can look for causes they care about. A strong business focus, caring for the homeless, reducing taxes or insuring that everyone is covered by medical insurance. Whatever the cause, supporting candidates that believe in those causes can add a lot to the overall satisfaction of the donor along with our democracy.

Choose How Much to Donate and When

Once donors have chosen the campaigns to contribute to they can decide on what the dollar amount will be on a regular or periodic basis. That amount of course should work within the overall financial budget. If not financial problems could develop down the line.

Again, this support can start at the school board level or it can go as far as a national campaign. The important part is to keep in mind that elected officials also respond to those who donate to their campaign. By giving on a consistent basis voters can let their voices be heard.

Political donors throughout the country care about a number of issues that affect our society in either a small or big way. The best way to have their voice heard is not only contacting their politicians but also giving to their campaigns. When it comes to having an overall financial plan to do that, once necessary bills are paid, giving to political campaigns can help enhance the life of not only the giver but the politician that is receiving the donation.

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