Trump’s panned payroll tax deferral is mandatory for 2.2 million federal employees and military members
An estimated 2.2 million federal employees and military personnel cannot opt out of President Trump's temporary wage tax deferral, which means they will see larger paychecks by the end of the year but smaller paychecks early next year.
Employers generally have the option to opt out of deferred income tax, which was rife with trade groups (and even the U.S. Chamber of Commerce) after Trump passed the new guidelines in an Aug. 9 memorandum.
Several federal unions are already calling for more clarity and options for their employees. The National Treasury Employees Union (NTEU), which represents 150,000 federal employees, sent a letter to the Office of Administration and Budget (OMB) asking for basic information, such as: B. when the deferral begins and how the money will be repaid in the next year.
Read more: Income Taxes, Explained
"They deserve to be fully informed about the impact of Executive Ordinance on their paychecks and family budgets in the coming months," wrote Tony Reardon, National President of the NTEU, in the letter.
"Our members have reached out to us virtually since the announcement to tell us there was a lot of confusion," said Andrew Huddleston, a spokesman for the American Federation of Government Employees (AFGE), which represents 700,000 federal employees. said Yahoo Money. "They're not happy with it, they don't know why they're going to have a huge tax burden next year, they worry about fines and fees, and they want the opportunity to opt out."
U.S. President Donald Trump is seen after signing executive orders for economic relief during a press conference as part of his spread of coronavirus disease (COVID-19) at his golf resort in Bedminster, New Jersey, United States, on August 8, 2020. REUTERS / Joshua Roberts
Beginning this month and through the end of the year, eligible federal employees and military personnel will receive higher paychecks as the government will not withhold the 6.2% tax that Social Security funds.
But these federal employees and military personnel will be double-taxed at 12.4% as of January, which will reduce their paychecks so they can repay the deferred amount to the government.
Read More: Everything You Need To Know About Trump's Payroll Tax Deferral
The mandatory deferral applies to the 22 executive agencies. According to an analysis by Karen Jowers of The Military Times, according to the American Federation of Government Employees, around 1.2 million federal employees and more than 1 million military personnel are eligible for the moratorium.
"The executive is implementing the delay to provide relief to our employees as soon as possible in line with the president's memo," Rachel Semmel, spokeswoman for the Office of Management and Budget, told Yahoo Money. "The president took action when Congress didn't."
It may not be easy to allow employers to log in or out. The problem may be due to administrative costs and burdens that plagued the private sector as well.
"It's an administrative headache," said Aaron Fritschner, a spokesman for Rep. Don Beyer (D-VA), to Yahoo Money. Beyer was a vocal critic of the mandatory moratorium for military personnel and federal employees. “You have to tick one box for each authorized person. You don't have time for it. Trump announced this directive a month ago yesterday. "
Yahoo Money's sister site, Cashay, has a weekly newsletter.
Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.
Workers will see smaller paychecks as part of Trump's tax deferral over the next year
President Trump's order could place "a substantial tax debt" on Americans.
The IRS fails to collect billions in taxes owed by super-rich Americans
Tax Expert: Americans who fail to file documents leave billions of dollars on the table
Read more Cashay personal financial information, news, and tips
Click to receive the most important news as a notification!
Most Muslim Voters Don't Like Donald Trump. But Has Joe Biden Done Enough to Earn Their Votes?
1997 all over again? Trevor Lawrence may return to Clemson for 2021
Vatican broadens seminary abuse trial amid negligence claims
'Bachelorette' Contestant Zach J. Will Apparently 'Polarize' Fans On Tonight's Episode
'The Bachelorette': Who Is Zach Jackson?
Blockbuster deal: Callaway announces merger with Topgolf