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Stretch it out: 3 ways to maximize the benefits from the American Rescue Plan Act of 2021 for your family

  • Low-income Nebraska families can seize this historic opportunity to meet needs, pay bills, and build for the future
  • There is great potential to maximize the available grants and tax benefits for your family
  • Thousands could be lifted out of poverty

The American Rescue Plan Act (ARPA) presents a historic opportunity for low-income Nebraska families to catch up on basic needs and to build for the future.

But here’s the catch, this use of ARPA financial assistance (including stimulus payments, rental and utility assistance, and child tax credits) must be done carefully, or opportunities to resolve financial problems will slip away.

The COVID-19 pandemic has hit low-income Nebraska families hard. With so many facing lost income, continued low-employment levels, and an economy that has not yet recovered, the ARPA, signed into law earlier this month, will not only help thousands of these hard-working families make ends meet — but if used carefully, the financial assistance provided and tax credits gained will lift thousands of people out of poverty.

Legal Aid has a long history of advising and counseling its low-income clients on how best to protect their limited income and assets and to stretch limited finances for long-term health.

Like large law firms advising wealthy investors, Legal Aid advises low-income families through its own specialized debt, income, and tax attorneys.

3 ways for Nebraska families to get the most out of ARPA assistance

Legal Aid’s experts offer this three-step guide for stretching ARPA financial assistance, all allowed and encouraged by law.

We recommend:

  • Use stimulus payments for needs, not old debts
  • Use rent and utility assistance … for back rent and utilities
  • Get Child Tax Credit as real money in your bank account

    1. ) Spend stimulus payments on needs, not debts.  With qualifying families of four receiving $5,600, many will find it tempting to gain relief from, for example, collectors hounding them on old credit card or medical debts. We recommend NOT spending stimulus funds on old debts. With Nebraska’s Attorney General Doug Peterson advising these stimulus funds are exempt from garnishment, low-income families should now choose to spend these funds not on debt, but on basic needs and deferred expenses, like fixing the car.

    We also recommend that low-income families NOT use stimulus payments on rent or utilities. There are other funds available for that purpose. If you use it on rent, you can’t use it on fixing your car!

    2.) Get and use rent and utility assistance to pay off back rent and utility bills. Rental and utility assistance is now available to pay back rent and unpaid electric and gas bills, and families can now apply for it online. You’ll need to work with your landlord and your utilities, but they’ll be happy to see payment.
    These funds are available to catch up on rent and utilities from up to one year ago and also three months ahead, so using these funds instead of stimulus payments to catch up on rent and utility bills makes great sense. We strongly recommend low-income families GET AND SPEND these rent and utility funds on what they’re intended for — helping to stretch stimulus payments as far as possible.

    3.) Make sure you are getting new child tax payments sent directly to your bank account — every month during the second half of the year. The ARPA has made the Child Tax Credit, during 2021, “money in the bank” for low-income families. If parents are not filing taxes jointly, then only the one with custody is eligible for the credit.  

    Between the months of July 2021, through December 2021, the IRS will make advance payments (send you the money!) of $250 a month for each child ages six through 18 and $300 a month for each child under six, for eligible low-income taxpayers. (The IRS will determine the child’s age as of January 1, 2021).

    Over the year that’s $3,000 or $3,600 per child— real money that can be used to meet needs and build for the future. Some tax rules apply, but generally, if you are low income with no income tax debt you’ll get half as advance monthly payments, the other half as a tax refund.

    The advance payments will be distributed through the same payment method the IRS uses for stimulus payments and refunds. If the IRS has your bank account information, they will deposit your advance payments directly in your account each month.

    We recommend you file your taxes (through e-file, if possible), even if you don’t owe any income taxes, so you are sure to get these needed funds sent right to your bank account. Taxes done through e-file are being processed in a few weeks as compared to paper that can take as long as a few months to process.

Do you have any questions or need additional help?

Legal Aid’s expert advice on debt, income, taxes and benefits for low-income Nebraskans is ready to help you stretch your ARPA financial assistance as far as you can.

Check out more resources:

Milo Mumgaard, (he/him/his) Executive Director of Legal Aid of Nebraska, is the author of this article. Shailana Dunn-Wall, (she/her/hers) Christine A. Brunswick Public Service Fellow and Fellowship Staff Attorney at Legal Aid of Nebraska also contributed to this article.



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