President Signs Coronavirus Relief Orders
September 2020Personal Finances General/Other
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Originally published August 11, 2020.
On August 8, 2020, President Trump signed four executive orders designed to provide relief to American workers and businesses still reeling from the coronavirus pandemic. This move sidestepped Congress which has been hopelessly deadlocked in negotiations over another coronavirus aid package. Below we discuss how these measures will affect you.
Temporary Deferral of Payroll Tax Withholding
One executive order postpones withholding of payroll taxes (Social Security and Medicare) from September 1 through December 31 for individuals earning less than $104,000 annually.
Currently, all employees and employers pay a 6.2% Social Security payroll tax on wages of up to $137,700, along with a 1.45% Medicare tax on an unlimited amount of wages. Accordingly, an employee earning $50,000 would pay $3,825 ($50,000 x .0765) in payroll taxes each year. That money goes towards specific programs such as Social Security, healthcare, unemployment compensation, and workers’ compensation.
This deferral would save the average worker approximately $1,200 over the four months, according to Larry Kudlow, a senior White House economic advisor. The maximum savings that any employee would see is about $2,149. However, this is simply a deferral, and not an elimination, of the payroll taxes since they must be paid at a later date.
Federal Unemployment Benefit Extended
Another executive order extends the federal supplemental unemployment benefit which ended July 31, 2020, but reduces it from $600 a week to $400 a week. Under the order, the federal government will be responsible for $300 per week, while the states will be responsible for the remaining $100 a week.
Student Loan Payment Deferral Extended
Another executive order waives student loan interest, and related payments due, until December 31, 2020, extending the current relief under the CARES Act that’s set to expire on September 30. Payments are scheduled to resume January 1, 2021.
Relief for Late Fees and Eviction Filings
The CARES Act banned late fees and eviction filings until July 25, 2020, on real estate backed by federal mortgage programs like Fannie Mae or those that receive federal funds like HUD. While these protections have not yet been renewed, the Presidential order leaves the decision to ban evictions in the hands of the Health and Human Services Secretary, Alex Azar, and the Center for Disease Control Prevention Director, Robert Redfield.
The McGill Advisory content is provided for informational purposes only and does not constitute legal, accounting, or other professional advice.
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