WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT?

FINANCIAL LITERACY

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT?

byPowers Investments Management, LLCMarch 15, 2021450 Views

About three in four Americans receive a tax refund each year, averaging $3,000.00 The government kindly pays YOUR HARD EARNED MONEY back in the form of tax refunds.If I asked you to loan me $3,000.00 for 12 months at zero interest, how many would agree?Thank you, I accept!

My first job after college paid $20,000. I LOVED and NEEDED my federal and state tax refund. It was free money – Right?WRONG – You only receive a refund if you loaned Uncle Sam more money than you legally owed. Uncle Sam gets to keep your money for up to fifteen months at zero interest. Hey-it’s the government they are not really your Uncle!

OUR GOVERNMENT NEEDS EVERY DOLLAR IT CAN GET!

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (2)

The U.S. Internal Revenue Service (IRS) needs this zero-interest loan. “Balanced against the value of its commercial assets, thefederal governmenthad a combined total of$103.7 Trillion ($103,658,000,000,000.00)indebts, liabilities, and unfunded obligationsat the close of its 2019 fiscal year.” This amounts to~$315,315.00debt forevery U.S.man, woman, child, and baby!

Keep these numbers in mind when you hear Politicians bragging about their generosity of spending another $1.9 Trillion-THAT WE DO NOT HAVE!

NO SUCH THING AS FREE MONEY!

A good friend and mentor taught me my goal is to owe and receive $0 taxes on April 15^th. Err on the side of paying a small amount, so the government gives you an interest free loan. This means 75% of you need to adjust the number of dependents on your W-4 form.

HOW TO COMPLETE A W-4 FORM – SEEFORMS IN APPENDIX

AW-4 form tells your employerhow much tax to withhold from each paycheck. Your employer remits the tax to the IRS on your behalf.{Remember Uncle Sam – My Least Favorite Uncle, ALWAYS gets paid first!

You probably filled out a W-4 when you started your job and can change your W-4 any time. Typically your workplace (Human Resources) can provide a Form W-4. I included the form in the appendix, or google W-4.

The W-4 form comes with an allowances worksheet to help you figure out how many dependents to claim. To get the most accurate tax withholding, resulting in almost ZERO dollars owed or due at tax time, answer the allowance questions accurately.

There is an excellent withholding calculator on the IRS website which will help you precisely determine your allowances and help complete the W-4 to meet your needs.

CONCLUSION – WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT?

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (3)

Taxpayers who receive a refund effectively give the IRS more money than owed for the year but receive only that same amount of money back after filing. You could have saved, invested, paid down debt, etc., with that money!

Adjusting your withholdings to avoid a refund will pay off financially, helping you achieve Financial Freedom.

What to do with that extra $250 each month (Average American receives $3,000.00 refund. $3,000.00/12 months = $250 EACH MONTH)? Save the $250.00 and invest it! If you could live without this money in 2020, you can live without it in 2021 and the future. SAVE TO ACHIEVE YOUR FINANCIAL FREEDOM!

MAKE 2020 THE LAST YEAR YOU GIVE THE GOVERNMENT AN INTEREST-FREE LOAN!

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (4)

APPENDIX

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (5)

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (6)

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (7)

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (8)

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (9)

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Thank you to my followers and readers for your likes and comments.All comments, recommendations, and feedback are welcomed and utilized to improve this blog.

ABOUT ME

I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.

I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life.It is my time to serve and give back.

DISCLAIMER

Istarted my first business at ~13 years of age (a smallbutbrilliantly createdplant nursery).I am a successful investor in stocks, options, real estate, and happy to share my finance and investment lessons learned with you.

However, I amNOTa licensed financial advisor.Please do not construe my suggestions on this blog as recommendations for your situation.Please seek your licensed CPA or fiduciary financialadvisors for individual financial advice.

I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.

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Tags : Internal Revenue Service (IRS), IRS, Tax Season, W-4 Form

WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (2024)

FAQs

Why does the US government borrow so much money? ›

The federal government needs to borrow money to pay its bills when its ongoing spending activities and investments cannot be funded by federal revenues alone. Decreases in federal revenue are largely due to either a decrease in tax rates or individuals or corporations making less money.

Why is the US in so much debt? ›

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

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What does it mean to borrow money on the credit of the United States? ›

When it borrows money on the credit of the United States, Congress creates a binding obligation to pay the debt as stipulated and cannot thereafter vary the terms of its agreement.

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Who does the US owe the most money to? ›

Nearly half of all US foreign-owned debt comes from five countries.

Country/territory	US foreign-owned debt (January 2023)
Japan	$1,104,400,000,000
China	$859,400,000,000
United Kingdom	$668,300,000,000
Belgium	$331,100,000,000

6 more rows

How much US debt matures in 2024? ›

A record $8.9 trillion of government debt will mature over the next year, see the first chart below. The government budget deficit in 2024 will be $1.4 trillion according to the CBO, and the Fed has been running down its balance sheet by $60 billion per month.

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Who owns US debt by country? ›

Top Foreign Holders of U.S. Debt

Rank	Country	Share of Total
1	🇯🇵 Japan	14.7%
2	🇨🇳 China	11.9%
3	🇬🇧 United Kingdom	8.9%
4	🇧🇪 Belgium	4.8%

35 more rows

Mar 24, 2023

Where is the US debt coming from? ›

The U.S. government incurs debt when it issues Treasury securities to fund the deficit between the amount of money that it receives in taxes and other revenues versus the amount of money that it spends on defense, welfare programs, the interest it pays on its current debt, and more.

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Is the US debt too big? ›

Economists measure the severity of a nation's debt based on its debt-to-GDP ratio. The U.S. debt held by the public is nearly at 100%. The Committee for Economic Develop of the Conference Board says a responsible debt-to-GDP ratio for a country the size of the U.S. would be 70%.

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Who is the US in debt to? ›

Including both private and public debt holders, the top three December 2020 national holders of American public debt are Japan ($1.2 trillion or 17.7%), China ($1.1 trillion or 15.2%), and the United Kingdom ($0.4 trillion or 6.2%).

Who owes the US money? ›

In total, other territories hold about $7.4 trillion in U.S. debt. Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion. In isolation, this $7.4 trillion amount is a lot, said Scott Morris, a senior fellow at the Center for Global Development.

Who has the power to borrow money, state or federal? ›

In addition to making laws, the legislative branch decides how the government will spend its money. Article I, Section 8, Clause 2 of the Constitution is known as the "spending and borrowing power." It grants Congress broad power to borrow and spend money as it sees fit for the "general welfare" of the country.

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How much does China owe the United States? ›

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

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What country owns most of the United States? ›

Which countries own the most land in the U.S.?

CANADA. 31%
Other. 28%
NETHERLANDS. 12%
ITALY. 7%
UNITED KINGDOM. 6%
GERMANY. 6%
PORTUGAL. 3.6%
FRANCE. 3.2%

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Mar 29, 2024

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What happens if China dumps US bonds? ›

If China (or any other nation that has a trade surplus with the U.S.) stops buying U.S. Treasuries or even starts dumping its U.S. forex reserves, its trade surplus would become a trade deficit—something which no export-oriented economy would want, as they would be worse off as a result.

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What is the US dollar backed by? ›

Prior to 1971, the US dollar was backed by gold. Today, the dollar is backed by 2 things: the government's ability to generate revenues (via debt or taxes), and its authority to compel economic participants to transact in dollars.

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What would happen if the US debt was paid off? ›

Answer and Explanation: If the U.S. was to pay off their debt ultimately, there is not much that would happen. Paying off the debt implies that the government will now focus on using the revenue collected primarily from taxes to fund its activities.

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What happens if US debt gets too high? ›

A nation saddled with debt will have less to invest in its own future. Rising debt means fewer economic opportunities for Americans. Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.

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WHY DID YOU LOAN $3,274.29 AT 0% INTEREST TO THE FEDERAL GOVERNMENT? - $ WEALTH BUILDING POWERS (2024)