How the Executive Orders Affect PUA and Payroll Tax

On August 8, President Trump signed three memorandums and one executive order addressing COVID-19 relief.

Here’s how these new actions impact unemployment benefits and payroll tax.

Extension of unemployment benefits

The Pandemic Unemployment Assistance program (PUA) will be extended until December 27, 2020. However, the additional amount under the expanded benefits will be reduced to $400 a week. The program will allocate up to $44 billion for continued lost wage assistance. The order calls for already cash-strapped states to fund $100 of the weekly amount, which could mean a delay of the program being rolled out to certain folks.

The extended PUA would only apply to those who are eligible to receive at least $100 in unemployment benefits. Sole proprietors, contractors, and the self-employed will also be affected as the amount they are eligible to receive through PUA has been reduced and it’s still unclear when they can start receiving unemployment again.

Because the Constitution gives Congress the rights to control federal spending, not the White House, experts predict that this executive action will be challenged in the courts.

Payroll tax deferral

Payroll tax would not need to be paid between September 1, 2020 and December 31, 2020. The tax would need to be paid once the deferral period ends, but interest will not be charged. The deferral applies to those who earn less than $4,000 every two weeks.

The order instructs the Secretary of the Treasury, Steven Mnuchin, to explore ways to have the deferred taxes forgiven as well. But it is not possible for a president to forgive taxes without approval from Congress.

Other changes

Trump also directed other federal departments to consider extending an eviction ban if it helps limit the spread of COVID-19. The current pause on student loan payments and suspension of interest has also been extended to the end of the year, December 31.

More COVID-19 resources

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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