On Saturday, August 8, President Trump signed one executive order and three memos intended to provide Coronavirus relief. Trump’s executive actions provide direction on issues such as student loan forgiveness, evictions, unemployment benefits and payroll tax deductions. We’ll explain how each one might affect you below, especially regarding a second $1,200 stimulus check.
Trump’s Memo Suspends Social Security Retirement, Disability Payroll Tax Payments Until 2021
Remember those $1,200 stimulus checks most people got earlier this year? Those who depend on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits got them, too. Trump’s first Covid relief memo essentially replaces a second stimulus check with a payroll tax deferral until January 2021.
Payroll taxes are also known as FICA taxes, which stands for “Federal Insurance Contributions Act.” The memorandum’s text reads: “The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020…” However, the text later makes this payroll tax deferral retroactive to August 1, 2020.
The text of U.S.C. 3101a says: “3101a. Rate of tax: Old-age, survivors, and disability insurance. In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to 6.2 percent of the wages (as defined in section 3121(a)) received by the individual with respect to employment (as defined in section 3121(b)).”
So, to recap: This memo suspends the 6.2% workers pay in Social Security taxes until 2021.
What This Social Security Payroll Tax Pause Means for Workers
If you’re not working, Trump’s payroll tax holiday doesn’t provide any financial relief for you. Trump’s executive orders mention nothing about a second $1,200 stimulus check, or aid for people on Social Security benefits. In addition, the FICA payroll tax suspension only applies to workers earning less than $104,000 annually. Since an executive memorandum isn’t legally binding, employers are also free to disregard it. Affected workers whose employers enforce the memorandum still owe those taxes after the deferral period ends January 1, 2021. However, they’ll owe the entire amount at once, like a “balloon payment” on some home mortgages. Here’s an example of how that might look:
- You work full-time and make $15/hour.
- Your employer stops withholding Social Security taxes until December 31, 2020.
- Your biweekly paychecks go up about $73.60 until the end of the year. In other words, you get paid about $588.80 more between now and December 31, 2020.
- Sometime after January 1, 2021, you now owe $588.80 in Social Security payroll taxes in one lump-sum payment.
What This Payroll Tax Deferral Means for Social Security Disability Recipients & Retirees
Experts say Trump’s payroll tax deferral cuts $150 billion in Social Security funding between now and December 31, 2020. As a result, this could deplete the trust fund that pays both Social Security disability and retirement benefits by 2029. And this isn’t the first time Trump’s tried to enact significant Social Security disability cuts during his presidency. Trump’s already promised to cut Social Security and Medicare taxes permanently if he wins a second term in November. If that happens, Social Security disability recipients could stop receiving payments as early as 2022.
What Trump’s Executive Order Says on Housing Evictions
Trump’s executive housing order does not provide any rental or mortgage assistance funding. It also doesn’t extend the evictions ban Congress enacted earlier this year that expired July 31. Instead, it directs HHS Secretary Azar and CDC Director Redfield to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of Covid-19.”
What This Order Does for Homeowners with FHA-Backed Mortgages Facing Foreclosure
The Federal Housing Finance Agency (FHFA) and Federal National Mortgage Association (FNMA) will suspend foreclosures until after August 31, 2020. If your home mortgage isn’t backed by one of these agencies, you have no foreclosure protections.
What This Order Does for Renters Facing Eviction
Trump’s executive order directs Treasury Secretary Mnuchin and HUD Secretary Carson to identify temporary financial assistance funding. Essentially, it provides the nearly 1 in 5 renters facing eviction no federal protections or additional money for housing costs.
Trump’s Unemployment Benefits Memo: When Will Extra $400 Payments Go Out?
If you’re not currently working, the $600/week in federal pandemic unemployment benefits ran out on July 31. Trump’s unemployment extension memo requires state governments to provide $100/week to qualify for $300/week in federal enhanced unemployment benefits. However, it’s unclear if people in states that can’t afford the required 25% contribution will get $300/week payments — or nothing.
When & For How Long Can Unemployed Americans Get These Extra Payments?
Because Trump’s memo pulls $44 billion from FEMA funds intended for natural disaster relief, it may take some time. It’s unlikely anyone can get an enhanced unemployment check sooner than September at the very earliest, say experts. Why? Because states cannot use their current UI systems to distribute benefits authorized outside of the usual Congressional approval process. In other words, states must create an entirely new system to distribute Trump’s $300/$400 in authorized weekly unemployment. That could take weeks or months to implement, says National Employment Law Project senior analyst Michelle Evermore.
Trump’s memo itself says the $400 supplemental unemployment benefits cannot last past December 27, 2020. However, that $44 billion in FEMA funding won’t stretch further than 4-5 weeks, at most. That means unemployed people could receive those extra $400 payments for up to five weeks between September and November 2020.
Trump’s Memo on Student Loans Freezes Payments, Interest Until January 1, 2021
Back in March, the CARES Act suspended all student loan payment collections and waived interest until September 30, 2020. Trump’s student loan memo extends that deadline until January 1, 2021. However, this deferral doesn’t apply to all student loans – only federal ones held by the Department of Education. In other words, it doesn’t cover the $165 billion in federal student loans sourced from private lenders, like banks.
You May Qualify for Legal Assistance
Trump’s recent executive actions cannot replace actual laws or funding passed through Congress. If you’re facing eviction or struggling financially because you cannot work, you may qualify for Social Security disability benefits. Having a lawyer file your disability claim makes you 3x more likely to get approved. You’re also likely to receive your first disability payment faster than you would applying on your own.
Not sure if you qualify, or even need a Social Security lawyer to handle your claim? Sign up for a free phone call from the closest lawyer available to help answer your claim questions today. This phone call doesn’t obligate you to do anything else and is the first step towards qualifying for benefits. If a lawyer can’t get your claim approved, you pay $0 for legal assistance. And if you do win, then you’ll only pay a small, one-time fee.
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Lori Polemenakos is Director of Consumer Content and SEO strategist for LeadingResponse, a legal marketing company. An award-winning journalist, writer and editor based in Dallas, Texas, she's produced articles for major brands such as Match.com, Yahoo!, MSN, AOL, Xfinity, Mail.com, and edited several published books. Since 2016, she's published hundreds of articles about Social Security disability, workers' compensation, veterans' benefits, personal injury, mass tort, auto accident claims, bankruptcy, employment law and other related legal issues.