This is where your tax dollars actually go

The U.S. is expected to bring in $3.5 trillion in tax revenue in 2018, according to Congressional Budget Office projections. About half of that comes from individual income taxes and one-third comes from payroll taxes, which include Social Security and Medicare taxes that workers pay.

That's right — the federal government relies heavily on your tax dollars. So you might be wondering, "Where does tax money go?" To find out, GOBankingRates looked over the Congressional Budget Office projections for 2018.

Click through to find out which items your tax dollars are funding.

9 PHOTOS
Here's where you tax dollars are actually going
See Gallery
Here's where you tax dollars are actually going

The Federal Budget

The federal budget is projected to be $4.09 trillion for fiscal year 2018, which runs from October 2017 through September 2018, according to the Congressional Budget Office. With tax revenue expected to be $3.5 trillion, that means there will be a deficit of more than $560 billion.

Note that these figures are the latest available from the CBO but are from a June 2017 report — which was released before the tax cut that was enacted in December 2017 and a budget deal that was reached in February 2018. The percentages for each category of budget spending are based on the CBO's 2017 projections.

Click to find out why you shouldn't assume you're getting a tax refund this year

Photo credit: Getty

Social Security

At 24 percent, Social Security benefits make up the largest share of the federal budget. The U.S. is expected to pay out $988 billion in Social Security old-age, survivors and disability benefits in 2018.

Social Security is funded through a 6.2 percent payroll tax that workers pay and another 6.2 percent that employers pay. Self-employed people have to pay the full 12.4 percent. However, because of the number of adults 65 and older is expected to increase dramatically by 2035, Social Security tax revenues will cover only about 75 percent of benefits, according to the Social Security Administration.

Find Out: What Social Security Will Look Like in 2035 

Photo credit: Getty

Medicare

Medicare spending is expected to be $711 billion in 2018, which makes this outlay 17 percent of the federal budget. This federal program provides health insurance coverage for adults 65 and older.

Medicare is funded by a payroll tax of 2.9 percent paid by employees and employers. Each pays 1.45 percent of an employee's income. It's also funded by general revenues and premiums paid by Medicare recipients.

Get Informed: 2018 Medicare Changes You Need to Know About 

Photo credit: Getty

Defense

The Congressional Budget Office's 2017 report shows that the federal government is projected to spend $634 billion on national defense in 2018. That's 15 percent of the federal budget.

President Trump's proposed budget for 2019 calls for increasing defense spending to $686 billion. That is equal to 15.5 percent of the proposed $4.40 trillion budget. 

Photo credit: Getty

Medicaid

About 10 percent of the federal budget goes toward Medicaid. In 2018, spending on this joint federal and state health insurance program for low-income people is expected to be $410 billion in 2018. However, Trump's 2019 budget proposal seeks cuts in this government safety net, USA Today reports.

In addition to Medicare and Medicaid, the federal government also funds the Children's Health Insurance Program (CHIP) for children of low-income families and health insurance premium subsidies for the Affordable Care Act. Combined, funding for these two health programs is $74 billion, or 1.8 percent of the budget.

With potentially big changes coming, be sure to take advantage of this safety net while you can. 

Photo credit: Getty

Income Security Programs

About 7 percent of the federal budget will be spent on income security programs in 2018. These programs include unemployment compensation, earned income tax credits, child nutrition programs and the supplemental nutrition assistance program (SNAP). The government is expected to spend $292 billion on these programs — which is a decrease from previous years, according to the Congressional Budget Office. 

Photo credit: Getty

Federal Civilian and Military Retirement

Funding for retirement benefits for federal civilian workers and military members makes up almost 4 percent of the budget. The Congressional Budget Office projects that the federal government will spend $160 billion on these retirement benefits.

Tax Help: Take Advantage of These 16 Commonly Missed Tax Deductions 

Photo credit: Getty

Veterans Programs

Veterans programs get just 2 percent of the federal budget. The government is expected to spend $101 billion in 2018 on compensation, pension, life insurance and other programs for veterans.

Don't Miss the Date: These Are the Penalties for Filing Taxes Late 

Photo credit: Getty

Agriculture and Other Programs

Another 1.7 percent of the budget — $84 billion — goes to agriculture programs, Fannie Mae, Freddie Mac and other services. Fannie Mae and Freddie Mac help provide financing for mortgage lenders. 

Photo credit: Getty

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

This article originally appeared on GOBankingRates.com: This Is Where Your Tax Dollars Actually Go

Should I Include a Dependent's Income on My Tax Return?

It may be easier and less expensive to include dependents' income on your tax return rather than have them file their own return—in certain circumstances.

Read More

Brought to you by TurboTax.com

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

Read More

Brought to you by TurboTax.com

Tax Tips After January 1, 2019

TurboTax gives you ten tax saving tips for the new year. Find strategies to lower taxes, save money when preparing your tax return, and avoid tax penalties.

Read More

Brought to you by TurboTax.com

Should You and Your Spouse File Taxes Jointly or Separately?

Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.

Read More

Brought to you by TurboTax.com
Read Full Story