A surge in income tax receipts helped cut the U.S. monthly budget deficit in half in April compared to a year ago, figures issued by the Treasury Department on Wednesday showed.

The budget deficit came in at $40.5 billion in April, compared with an $82.7 billion shortfall in April 2010, the Treasury said.

But the relatively favorable data didn't change the picture of an economy heading deeper in debt and just days away from a May 16 deadline for hitting a legally set ceiling on government borrowing.

For the first seven months of fiscal 2011, which ends September 30, the cumulative deficit swelled to $869.9 billion from $799.7 billion in the comparable year-earlier period.

The deficit figures are a somber backdrop for the ongoing effort by the Obama administration to reach agreement with Capitol Hill lawmakers on a course of action for slashing the deficit.

The White House said President Barack Obama will get involved directly this week in trading ideas with lawmakers on the problem but said he won't be negotiating with them. Republicans and even some Democrats want the administration to be more aggressive in cutting spending.

Adding urgency to the talks is next Monday's projected deadline for hitting a $14.294 trillion debt ceiling, which caps the amount the country can legally borrow. Republicans want the administration to agree to deep spending reductions as a price for agreeing to raise the limit.

In April, the budget report shows government spending rose to $330 billion from $328 billion in April 2010 and for the first seven months of the fiscal year it was up to $2.179 trillion from $1.999 trillion a year earlier.

On the income side, receipts in April rose to $289.5 billion from $245.3 billion. Within that category, individual income tax receipts rose strongly to $155.6 billion from $107.3 billion in April 2010 -- possibly a sign of an improving job market in a strengthening economy though Treasury offered no explanation.

Corporate income tax receipts in April gained to $25.1 billion from $23.1 billion in April last year, less striking than the increase in individual income tax receipts but nonetheless on the same upward trend.

April 18 was this year's filing deadline for individuals to pay their 2010 income taxes and April is typically a strong month for receipts. The April receipts number, for example, was triple the government's $52.8 billion take in March.

The Congressional Budget Office, Congress's watchdog agency, forecasts that for all of fiscal 2011 the government will post a staggering $1.4-trillion budget deficit -- a gap between spending and income that must be met by borrowing for purposes from paying for wars to doling out pensions.

Merely paying interest owed on publicly held government debt -- much of it to overseas investors -- cost $139.3 billion in April. That was up from $123.1 billion in April 2010.

(Reporting by Glenn Somerville, editing by Neil Stempleman)

Barack obama