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Now that tax season is over (except for those who filed for an extension), it's natural to wonder exactly where the hard-earned dollars you paid in tax over the past year actually went.
To answer that question, the White House put together a website that gives details on the government's expenditures. Dubbed the Federal Taxpayer Receipt, you can enter in your income, Social Security, and Medicare taxes and get a personalized look at where your tax dollars got spent. Understanding that Social Security and Medicare taxes go toward funding those respective programs, here are the 10 areas where the greatest percentage of income tax revenues gets spent.
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The 10 Biggest Things Your Income Taxes Pay For
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The 10 Biggest Things Your Income Taxes Pay For
Nearly 25 percent of all income taxes go to pay for defense. Of that amount, salaries and benefits for members of the armed services make up roughly a quarter, while most of the remainder goes toward equipment and supplies as well as weapons, construction, and research and development.
About 22.5 percent of income tax revenue goes toward health care programs. The two big expenditures are for Medicare and Medicaid, but additional amounts go toward health research, food safety, and public health services and disease control. These amounts don't include the dedicated Medicare taxes that workers have withheld from their pay.
The government spends roughly 17 percent of income tax revenue on various programs that provide money for those in need, including retirement benefits for federal employees, food and nutritional assistance, and Supplemental Security Income. The Earned Income Tax Credit and the Child Tax Credit are also funded from income tax revenue.
The national debt incurs a substantial amount of interest each year. Even at current low interest rates, about 8 percent of your income tax dollars go toward paying interest costs annually.
About 4.5 percent of spending goes to pay for various benefits for veterans. Income and housing support represent not quite half of the spending in this category, with health-care expenditures nearly as high. The remainder goes for education, training, and other benefits for former military personnel.
The majority of the 3.3 percent of income tax revenue spent on education and job training goes toward funding education through the high-school level. College financial aid, along with employment training for those with disabilities and more general job training and employment services for the broader public, take up the remainder.
Just over 2 percent of income tax revenue goes to support the nation's immigration and law enforcement programs. These expenses help fund the nation's court system, as well as federal law enforcement agencies and the federal service that implements U.S. immigration policy.
About 2 percent of revenue from income taxes is spent on various expenses related to the natural resources of the nation. About a third of that money goes toward water and land management, with the remainder funding environmental protection initiatives as well as management of the nation's energy assets and conservation efforts.
Money going toward international initiatives makes up about 1.7 percent of total income tax revenue. About half of that amount is spent on humanitarian and economic-development assistance, while the remainder is split among the costs of maintaining embassies and diplomatic missions, and providing security assistance overseas.
Just over 1 percent of income taxes go toward science-related programs. More than half of that amount goes to NASA, but additional recipients include the National Science Foundation as well as various national laboratories and other research facilities.
If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.
Filing taxes as a single parent requires coordination between you and your ex-spouse or partner. Usually the custodial parent claims the child as a dependent, but there are exceptions. A single parent is allowed to claim applicable deductions and exemptions for each qualifying child. Even though you claim your child as a dependent, she may still have to file her own tax return if she has income, such as from an after-school job.
The Child Tax Credit can reduce your tax bill by as much as $1,000 per child, if you meet all seven requirements: 1. age, 2. relationship, 3. support, 4. dependent status, 5. citizenship, 6. length of residency and 7. family income. You and/or your child must pass all seven to claim this tax credit.
