American Rescue Plan Act Child Tax Credits and Form W-4

This article provides pertinent updates to the Federal Form W-4 and Child Tax Credits based on the American Rescue Plan Act for 2021.

BACKGROUND

The American Rescue Plan Act (ARPA) has expanded child tax credits available to taxpayers when they fill out Form W-4:

• The age eligibility threshold has expanded to children under the age of eighteen (seventeen was the previous cutoff point.)

• The credit has increased from $2,000 to $3,000 per qualifying child.

TIP:

This change will impact Step 3 of the Federal Form W-4. This form has not been released by the IRS yet.

NEXT STEPS

We are waiting on further guidance and the release of the new Form W-4 from the IRS. As soon as the form is released, we'll update it on your Namely site on your behalf. 

TIP:

The new W-4 form can be used with our Tax Withholding Unification - Released 11/13/2019 feature. Anyone trying to claim the new child tax credits must fill out a new W-4 form.

FREQUENTLY ASKED QUESTIONS

Where can I go to find out more information regarding this new legislation?

You can read the contents of the bill at Congress.gov.

Will Namely be updating the new Federal W-4 in Adobe eSignature on our behalf?

Yes. Namely will be updating the new Federal Form W-4 on your behalf. We will notify you as soon as the form is available.

Will the new Federal W-4 work with the Tax Unification feature?

Yes. The new Federal Form W-4 can be used with the Tax Unification feature. We will notify you as soon as the form is available.