Let’s Talk About ARPA Updates for TY21

What is ARPA?

ARPA, also known as the American Rescue Plan Act of 2021, is an economic stimulus bill that was passed by the US Congress in March of 2021. The goal of this bill is to expedite recovery, specifically from the economic & health effects of the pandemic & the continued recession in America. Recently, there have been many changes made to the Child Tax Credit, thanks to the American Rescue Plan Act. In short, it is expected that this credit will begin helping families receive advance payments as soon as this Summer, for tax year 2021. See below for additional information…

What Does This Mean for Your Clients?

The IRS has said that “the expanded credit means… Credit amounts will increase for many taxpayers. The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes. The credit will also include children who turn age 17 in 2021. In addition, taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.”


Previously, laws notated that children under 17 could only qualify up to $2,000. As we move forward into tax year 2021, those claiming the Child Tax Credit will be eligible to receive $3,000 max per qualifying child (must be between 6-17 years old, at end of 2021). Those that have children under 6 years of age, will receive $3,600. Please keep in mind that married households (filing jointly) with incomes over $150,000, head of household filers (not filing jointly) with an income over $112,500 & any other taxpayer making $75,000 annually, will receive lesser amounts than noted above. To be eligible, said taxpayers must have a main home in the United States & must reside there for more than half of the year.

Additional Information

Advance payments of the 2021 Child Tax Credit will begin to be distributed as of July, through December, before the start of 2022. Note: Advance payments will only be up to 50 percent of the CTC. This total will be estimated from said persons previous tax return (from 2020 or 2019, should 2020 taxes not yet be filed/processed). Should your client not have filed their tax year 2020 returns yet, it is recommended to do this as soon as possible, to ensure that they qualify for CTC & receive the appropriate amount. Filing taxes online & doing so with direct deposit, can also speed up future payments/refunds/credits/etc.

Should you have family, friends or clients that have children, please be sure to share this information with them as soon as possible. After all, knowledge is power.