Trump administration’s tax cut for military service members to be repaid in 2021

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WASHINGTON – Under a presidential memorandum issued by the trump administration, tens of thousands of soldiers and civilians of the Ministry of Defense will obtain tax relief starting this month as part of efforts to boost the economy during the COVID-19 pandemic.

But while these men and women will see bigger paychecks for now, they will have to pay back all the money in 2021.

“This will be a huge problem for young military families,” said retired Army General Barry McCaffrey. “They, by human nature, will spend the apparent RAISE salary, then get their chops kicked when they receive several months of DOUBLE detention.”

Beginning with its mid-September paychecks, the Defense Department will begin to temporarily defer the 6.2% Social Security tax withholding for all DOD service members who earn less than $ 8,666.66 per month in base salary, and all DOD civilians who earn less than $ 4,000 pay period (approximately $ 8,000 per month).

Tens of thousands of people will receive bigger paychecks in the final months of the year as the United States heads into the November election.

Then the government will resume collecting tax and simultaneously collecting all deferred tax by withholding it from paychecks from January 1 to April 30, 2021, which means those same people will receive smaller paychecks than they are. ‘before tax deferral.

The pre-tax base salary for enlisted personnel starts at less than $ 2,000 per month.

Retired Admiral James Stavridis, NBC News analyst and former NATO commander, said: “It reminds me of ‘payday loans‘ in the sense that it will make cash flow management more difficult for me. young people enlisted in the force. don’t fall prey to the temptation to spend money that they really don’t have in the fall, because the IRS comes in later. It doesn’t make sense as a national policy, and hard to see the benefit for our troops. “

The White House liberated the presidential memorandum August 8, but the Defense Finance and Accounting Department just released guidance on its implementation over the Labor Day weekend. The deferral is mandatory for all eligible military and civilian members of the DOD.

All enlisted personnel will be affected by this, regardless of rank or time spent in the rank. All officers, from second lieutenant to majors and lieutenant-commanders of the Navy, will also have their taxes withheld. Almost all warrant officers and many intermediate officers will also be affected.

Chief Master Sgt. Air Force senior member JoAnne Bass has warned Air Force officials to make sure Airmen and their families are aware of deferred taxes “to avoid financial strains in the future.”

In a Facebook post on Monday, Bass wrote: “Unfortunately, neither military nor civilian employees can opt out of the postponement.”

“The extra money we get over the next few months,” she wrote, “will be paid back next year.”

On Tuesday, a group of 20 senators – 19 Democrats, two independents and Republican Senator Susan Collins of Maine – sent a letter to Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Russell Vought urging them to return the optional tax deferral.

“We urge you to let federal workers and military personnel in uniform choose whether or not to defer their tax obligations under IRS Notice 2020-65, rather than forcing them to participate. Federal workers and military should not be used as pawns for a payroll tax scheme that many private sector employers are unlikely to adhere to and where key questions remain unanswered, ”Senators wrote. .

The presidential memorandum also orders the Secretary of the Treasury “to explore avenues, notably legislative, to eliminate the obligation to pay deferred taxes”.

“A stupid, transparent decision for the election year,” McCaffrey said. “Trump needs Congress to allow a change in the law. They won’t. Payroll taxes are a foundation of Social Security.

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