Coronavirus Relief? What the New Executive Orders Mean for You...

 


            On Saturday August 8th, President Trump signed executive orders to provide relief for Americans who are struggling financially due to COVID. The action came with mixed reviews and questions regarding the legality of the orders. Without getting into the politics, I’ll break down what the executive orders mean and, most importantly, what they may mean for you.

1. Federal Unemployment Benefits are Extended (But They’re Reduced to $400, kinda)

The Good News: The initial federal enhanced unemployment aid gave those left jobless due to COVID an additional $600/week. However, this measure expired on July 31st leaving nearly 30 million Americans in limbo. For those who are currently unemployed due to the pandemic, this extension is probably a relief, since Congress is currently in a deadlock to pass a new stimulus bill, even though the benefit being offered is a reduction from the initial aid.

The Bad News: It’s not technically an automatic $400 though. Based on the memorandum, the federal government will allow states to use federal funds to provide $300/week in unemployment benefits to those who are eligible if your state contributes the other $100. But there’s a loophole, your state could count $100 of their normal unemployment payments as their contribution. Meaning you would only get an additional $300/week and not $400. The Department of Labor announced that states could use this workaround

To break this down a little more, let’s use an example. If State X normally pays its unemployed residents $500/week they could:

  • Pay their normal $500 + the $300 in federal funds + an additional $100 (as part of their contribution for this order) -- meaning their residents on unemployment would receive $900/week. OR
  • Pay their normal $500 (counting $100 of this money as their contribution for this order) + the $300 in federal funds -- meaning their residents on unemployment would only receive $800/week.

Also, it’s important to note, if your state chooses not to opt-in by declining to pony up the additional $100—or fail to use the workaround— this revised new program will be completely unavailable to you. Going back to our example above this means that you would only receive the $500 that State X normally pays to its unemployed residents. Lastly, this extension may not be long-lived. According to a report by the nonpartisan Committee for a Responsible Federal Budget, it is estimated that the enhanced unemployment benefit will have sufficient funding for about five weeks (through August 29).

 

2. Employee Payroll Taxes Delayed for the Rest of the Year (for those making less than approx. $100,000) 

The Good News: According to this memorandum, the withholding and payment of the 6.2 percent Social Security tax paid by employees for people making less than approximately $100,000 annually would be deferred for the rest of the year. This means that if you fall within this category you could see more money in your paychecks. This is money that could come in handy if you are experiencing financial hardships because of the pandemic. However, experts are not so sure this will be the case

The Bad News: A deferment is not a cancellation and you will eventually have to pay these taxes back— meaning you could be facing a high tax bill next year. Furthermore, according to Garrett Watson, senior policy analyst at the Tax Foundation, “It’s actually not clear that businesses would be required to necessarily pass along the deferred savings to employees and it’s very possible that businesses would be able to take the deferred savings while still withholding from employees.” This means there is a chance you won’t even see additional money in your check due to the deferment.

3. Evictions are Being Halted...Well, Not Exactly


The Good News: Not much good news on this one. The executive order doesn’t actually provide any housing aid or ban evictions. What it does do is direct the Treasury Department and the Housing and Urban Development Secretaries to identify/find any funds that could be used to help homeowners and renters who are struggling to pay their mortgage or rent. It also calls on the director of the Centers for Disease Control and Prevention to "consider" if temporarily halting evictions is "reasonably necessary to prevent the further spread of COVID-19."

The Bad News: As stated above, this executive order did not extend the original federal eviction moratorium that was included in the CARES Act, which expired in July. This means an estimated 30–40 million people in America could be at risk of eviction in the next several months, according to a study conducted by The Aspen Institute.

 

4. Student Loan Payments are Deferred Until December 31st    

The Good News: Interest rates, which are currently being waived, and Federal student loan payments, which are currently deferred thanks to the CARES Act have been extended until the end of the year. Giving financial relief to the millions of Americans with federal student loans for another 3 months. (On a personal note: This extension would give me more time to pay off the $7,000 I currently owe in student loans without the fear of the balance incurring interest. However, I think I’m going to stick with my September 30th deadline.) 

The Bad News: The extension is only temporary and full payments will begin on January 1st. Some may still not be in a situation to afford their payments at that time.

        So, there you have it. Hopefully, this helps you better understand what these orders mean. And hopefully, Congress will be able to come to an agreement soon to pass a more broad stimulus package.

 

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Comments

  1. This was very helpful! I had looked into the tax delays simply because I was afraid of being overtaxed in the near future. I appreciate you breaking it down into simpler terms for the rest of us who may not be used to the terminology and word play used in these bills and executive orders. Your blog is always so informative! I love how you educate, empower and entertain us weekly! Keep it up sis! You're amazing!

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    1. Aww Britt! You don't know how much your comment means to me! I truly appreciate all of the feedback and input you provide. Thanks!

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  2. Very good read. Love how you broke everything down and explained both the good and bad news for each order. I think alot of ppl take the good and run with it when you should weigh all options.

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    1. Thanks LOliver for the comment! You are sooo right, on the surface these all look pretty good but that's why it's always important for people to dig a little deeper to see that thing actually mean. I'm happy to do that for my audience. :-)

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  3. It certainly seemed like it was a step forward but Trump knows that many states can't afford the mathching $100 so it seems to have confused and stalled everything for those that need it. Great post that explained everything really clearly.

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    1. Exactly, which ultimately put many states in difficult position! Thanks for the feedback Molly!

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  4. Interesting post. I live in the UK so it was interesting to see what the US Government is doing and be able to compare that to the situation over here.

    David
    www.focusonthecustomer.net

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    1. It is always interesting in see how problems caused by COVID are being handled around the world. I hate to say it but I do believe the US is behind the curve with it's handling of the COVID in many aspects.

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  5. Great post with a lot of insightful information!

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