What Saturday's executive order could mean for freelancers

On Saturday, August 8, President Trump signed an executive order and several memoranda to extend enhanced unemployment benefits, defer federal student loan payments through the end of the year, extend student loan interest forgiveness, defer payroll taxes, and decrease evictions.

The actions are likely to face legal challenges before they can be enacted, however, as they subvert the constitutional separation of powers that prevents the president from making any laws that control spending. That power is held only by Congress and the Senate. Because of this, there is still time for a comprehensive relief package to be passed through the proper channels, and the executive order could be overturned either by congressional bill or a challenge in the Supreme Court.

The extended unemployment benefits are not a blanket renewal of the $600 FPUC program, but a reduction to $400, one-quarter of which is required to be paid by states. The extension is intended to be retroactive to August 1.

Freelancers should also pay close attention to the payroll tax deferral. The order would reduce a freelancer’s obligation by 50 percent from August 1 through the end of the year if your freelance income is less than $104,000. This means instead of paying 15.30% in Medicare and Social Security taxes, eligible freelancers will pay 7.65%.

While this may feel like a tax cut for a short period because you won’t technically have to pay the full amount of your self-employment taxes, it is only a tax deferral, meaning the taxes will still be due at a later date.

Because of the uncertain nature of these orders and whether they will actually be enacted, we will update this article as the situation evolves and will provide additional information as needed.

Jonathan Medows is a New York City–based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He provides tax, accounting and business articles for freelancers on his website, http://www.cpaforfreelancers.com — which also features a blog and a comprehensive freelance tax guide. Please note, due to the high volume of inquiries in regard to COVID-19, Jonathan is not able to respond to individual requests for information at this time.

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from Freelancers Union Blog https://blog.freelancersunion.org/2020/08/10/what-executive-orders-could-mean-for-freelancers/