The Presidential Election Campaign Fund | H&R Block
November 8, 2016 : Eli Colmenero – The Tax Institute
If public funding is a large pumpkin pie, you have direct say over a tiny sliver.
You might not even know it — but every year, on your Form 1040, you answer a question about a certain $3. You tell the government whether to fund presidential elections with your small piece of the pie.
“Presidential Election Campaign: Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund.”
You probably didn’t read through the 100+ page Form 1040 Instruction Booklet to find out about the fund. We don’t blame you. Here are the answers to the most common questions about the fund:
Why Does The Presidential Election Campaign Fund Exist?
In 1907, President Theodore Roosevelt’s State of the Union address introduced the idea of banning private contributions and instead establishing a public financing system for federal elections.
More than 60 years later, in 1971, Congress established the public fund to try to reduce candidates’ dependence on large donors and even the financial playing field in the general election. Tax returns started proposing a $1 contribution, which increased to $3 in 1993.
How Does This Work? Is This An Extra $3 of Taxes?
No. According to the Form 1040, checking either answer to the question “will not change your tax or refund.” Instead, the IRS appropriates $3 for each tax return that shows a “yes” answer to the fund.
There are some rules on the candidate side. Only candidates who receive broad national support can receive public funds. In order to qualify for matching funds, a candidate in the primary elections must first raise over $5,000 in each of 20 states (i.e., over $100,000), consisting of small contributions ($250 or less) from individuals. If candidates accept the funds, they must agree to several conditions, such as:
- Forgoing private contributions
- Spending no more than $50,000 of their own money on the campaign
- Limiting their total spending
- Allowing a Federal Election Committee audit after the election, to make sure the funds were used as intended, and to require repayment of any misappropriated public funds
While qualifying candidates can use public funds for primaries and general elections, political parties can no longer use the funds. Before 2014, parties often used the money to help cover the cost of nominating conventions. In 2014, President Barack Obama signed the Gabriella Miller Kids First Research Act, which reallocated the portion of the money that went to political parties to pediatric cancer research. So, long story short: Checking “yes” on the box will support pediatric cancer research and presidential campaigns.
Do Candidates Actually Take Advantage of the Funds?
If candidates don’t use public funding, they can spend as much as they want on their campaigns. For this reason, major presidential candidates haven’t accepted the funding in recent years. In 2008, President Obama became the first major candidate to fully decline public funding. Since then, almost all major presidential candidates haven’t accepted the funding.
Because of this decline, the fund is up to about $316 million. The government has occasionally used the funds to support government initiatives not related to elections. For example, in 2014 Congress decided party conventions would no longer receive funding from the presidential election fund. The funds earmarked for conventions was reassigned towards pediatric cancer research.
This All Sounds Great, But Should I Check “Yes”?
Freedom of choice is the beauty of democracy. It’s up to you.
As of 2013, about 7% of all individual income tax returns chose “yes.” If you check the box, you can still give privately – and your participation in the fund doesn’t count toward the $2,700 individual federal election contribution limit.
It’s easy to overlook this tiny question on your tax return. Now that you know where it came from, and what it means to the pie of public funding – the decision is yours.
View more tax tips here.