Don't Count Unemployment Benefits and Child Tax Credit as Income

HUD’s Office of Multifamily Housing Programs recently issued guidance regarding the treatment of unemployment benefits under the 2021 Consolidated Appropriations Act and the monthly child tax credit under the American Rescue Plan of 2021 (ARPA).

The 2021 Consolidated Appropriations Act and the ARPA amended three provisions to strengthen and extend unemployment benefits in the CARES Act, and the ARPA provides a monthly payment from the enhanced child tax credit that will begin being distributed to families in July 2021. HUD has determined that the $300 per week unemployment benefit and the upcoming monthly child tax credit payment are to be excluded from the annual income calculation.

HUD also stated in this guidance that owners can remind residents that the $300 per week unemployment benefit and child tax credit are not included in the annual calculation of income, and this could be used as a resource to help with unpaid rent.

Federal Pandemic Unemployment Compensation

Federal Pandemic Unemployment Compensation (FPUC) is an emergency program designed to increase unemployment benefits for millions of Americans affected by the COVID-19 pandemic. FPUC was first established by the CARES Act and the $2 trillion coronavirus emergency stimulus package signed into law by President Trump on March 27, 2020. Originally, FPUC provided an additional $600 per week to individuals collecting unemployment benefits, and these payments were to end on July 31, 2020.

However, under the Consolidated Appropriations Act and recently the ARPA, the FPUC was extended at a reduced rate, allowing unemployed individuals to receive an additional $300 per week, until Sept. 6, 2021.

In its Multifamily Q&A for COVID-19, HUD has stated that the weekly FPUC benefit is to be excluded when determining annual income. And in this most recent guidance, HUD reiterated that the reduced weekly FPUC benefit is still excluded when determining household income. 

Monthly Child Tax Credit Advance

The ARPA expanded the child tax credit (CTC) for the 2021 tax year. Households claiming the CTC for the tax year 2021 will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.

Advance payments of the 2021 CTC will be made in monthly payments of $300 per child, from July through December. The total of the advance payments will be up to 50 percent of the total allowable CTC.

In this recent guidance, HUD provides that the monthly child tax credit advance must be excluded as income when determining household income. Essentially, eligible households are receiving an advance payment on their 2021 federal tax refund, which is deemed excludable income.