Come January, military members may now see a much smaller decrease in their paychecks.
The funding bill and coronavirus relief package released by Congress has a provision that would give troops up to a year to pay back taxes that have been deferred from their paychecks.
Initially they were going to only have four months to pay back the taxes that were deferred since September.
The provision extends the time frame for service members, Defense Department civilians and federal workers to pay back the 6.2% Social Security tax.
Under guidance from the Internal Revenue Service, defense officials were set to start collecting deferred Social Security payroll taxes from troops’ paychecks in January over a four-month period through April — paying back the extra money that troops received in their paychecks from September through December.
Now that payback would be stretched over 12 months, to Dec. 31, 2021, so the decrease in the paycheck would be one-third of what was previously scheduled.
In August, President Donald Trump signed an executive order requiring the temporary deferral of Social Security payroll taxes for military members and federal civilian employees, from September through December. While that has meant extra money in troops’ paychecks for four months, they must now pay those taxes back.
Military Times
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The extension of time to pay back the deferred taxes will hopefully alleviate financial stress for military families during the pandemic.
Also included in the bill is direct cash payments to eligible Americans of $600, plus $600 per dependent child. To qualify you must be under the following income thresholds:
- Individual: You must earn less than $75,000 annually
- Head of Household: You must earn less than $112,500 annually
- Married Couple Filing Jointly: You must earn less than $150,000
However many veterans and civilians have shown frustration at the relief payment, saying the amount is not nearly enough.