On Saturday, August 8th, President Trump signed four new executive actions in an attempt to address still rampant unemployment and looming financial crisis. But how will these actions take effect, and will they affect you? Here are three things you should know.
- Federal student loans receive continued assistance. If you have student loans that were deferred or dropped to 0% interest through the CARES Act, you can breathe a small sigh of relief. The initial program of lower interest and deferment options was previously set to expire at the end of September. The recent Executive Actions have extended these benefits through the end of the year.
- Actions taken on Payroll taxes are only a postponement. While you may not be required to pay them out of your paycheck now, Payroll taxes will still need to be paid when you file your 2020 taxes next year. Due to this stipulation, many companies intend to continue collecting these taxes from their employees’ paychecks despite the Executive Action. If your employer does opt to stop collecting the standard Payroll tax from your check, it is advisable to set that money aside in a savings account in case you will need it in April 2021.
- Extended unemployment benefits are still questionable. One of the actions taken intends to use the Stafford Act to reroute Homeland Security funds for disaster relief. This money could then be used to help bolster unemployment by $300 per person per week for an estimated five additional weeks (retroactive to August 1st). Many news outlets are quoting $400. But 25% of the payment ($100) is expected to be covered by states. States have also been authorized to count any money they are already paying in unemployment to an individual toward their portion.
The Executive Action has also added stipulations to the bolstered unemployment, limiting the $300 federal payout to individuals who qualify to collect a minimum of $100 in state unemployment insurance. Based on these new qualifications and payout changes, actual payments and administration timelines will fluctuate significantly by state.
For some, these Executive Actions may provide some minor relief. However, it is best to keep an eye on or make changes to your current budget and updating plans based on current income and expenses. Congress remains in negotiations regarding further relief.