Please note that this blog is based on laws effective in August 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
We are still waiting for the dust to settle on President Trump’s executive orders to understand what they mean for taxpayers and business owners. There is a lot of talk about legal challenges and how Congress may react. In the meantime, we wanted to share with you what we do know and how it may or may not impact you.
Temporary Payroll Tax Relief
The President has directed the Treasury Department to grant all employers the ability to defer payment of the employee portion of payroll taxes from September 1 to the end of 2020. This is limited to employees earning less than $100,000 per year. While this seems like a tax cut, since paychecks will be larger, this is actually only a deferral of taxes since they will still be owed at a later date. Because no guidance has been issued by the Treasury Department at this time, we suggest that employers refrain from enacting the deferral until there is more clarity.
The $600 Federal unemployment benefit expired at the end of July. Since then, Congress has been debating various levels to extend this benefit. In the meantime, the President has allocated $400 per week of Federal funds for Americans currently out of work. The funds will be available through December 6 or until the Disaster Relief Fund is reduced by $25 billion. However, States are required to make up $100 of the $400 in extended benefits.
Eviction and Foreclosure Hardships
President Trump has directed his administration to prevent residential evictions and foreclosures resulting from financial hardships caused by the COVID-19 pandemic. Specifically, the executive orders state that the administration will take all legal measures needed to prevent this activity.
- Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) will consider measures to temporarily prohibit residential evictions for failure to pay rent due to COVID-19 hardships in order to prevent the further spread of the virus.
- Housing and Urban Development (HUD) will prioritize federal funds that can be used to provide financial assistance to struggling renters and homeowners.
- HUD will also work with its grantees to ensure that renters and homeowners are not forced out of their homes during the COVID pandemic.
Student Loan Relief
The President already took immediate action to relieve student loan borrowers by creating 0% interest and suspending loan payments. This was initially for 60 days but the executive order has extended it through the end of 2020. However, the debt is not canceled forever. Principal payments are due on December 31 and full payments will restart on January 1, 2021. The administration believes that some taxpayers will use this period of 0% interest to quickly pay down their student loans.
We will continue to monitor legislation and executive orders. As soon as we have more clarity we will update our blog with additional information. In the meantime, please don’t hesitate to contact Cray Kaiser at 630-953-4900 if you have any specific questions about Trump’s executive orders.