Do you think this second stimulus control held so much of us? At this point, it can only arrive in October – if it arrives at all.
Lawmakers are deadlocked on a second COVID-19 relief bill that, in theory, should allow a second direct incentive. Until such a bill is signed into law, that money cannot go out.
Why the delay? It turns out that Democrats and Republicans do not face each other on a number of major issues, and unemployment is a big one. But President Trump has made it clear that he is unhappy with that lack of progress, and to that end he signed a number of executive orders designed to provide relief in the absence of an approved bill.
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One of those executive orders included a period before tax evasion – which the president initially urged to include in an official incentive package. Specifically, that order seeks to defer the tax burden on employees from Sept. 1 until the end of 2020.
At first glance, this sounds like a good thing. With payroll taxes paid, Americans will get more money in their paychecks at a time when they really need it. The problem, however, is that the president’s order does not completely eliminate those taxes, which means that many people in 2021 could face a hefty tax bill.
Will the president’s payroll tax break cause more problems than it’s worth?
Employees pay a wage tax of 6.2% on income up to $ 137,700 which is used to fund social security. The president is trying to get workers earning up to $ 104,000 a year to postpone these taxes from early September until the end of the year. For workers earning a maximum of $ 104,000, this results in an additional $ 124 per week, or $ 2,232.
Meanwhile, the president has said that if he is re-elected in November, he will try to permanently forgive the four months of deferred payroll tax. But that is by no means guaranteed to happen. For one thing, the president may not have the power to do so. Furthermore, the permanent forgiveness of these taxes would be a huge blow to Social Security – a program whose financial problems are for the pandemic.
As such, those who receive the maximum tax deduction this year may be on the lookout for a $ 2,232 tax, coming 2021. And that is what today’s workers need to be aware of.
The whole point of the proposed tax break is to give Americans more money to spend in the short term. The economy, which is currently in a recession, needs money in a very desperate way. But workers who receive extra money in their paychecks from September onwards would be wise to put it directly into a savings account, as there is a good chance that they will have to pay it all back.
Of course, if the goal is to pump money into the economy, a second stimulus check would achieve just that. But until lawmakers are able to reach an agreement on a relief department, increased paychecks that may or may not be spent just have to do.
