The Child Tax Credit (CTC) of 2021 is set to be a game-changer for low-income families with children, and The Biden Administration estimates that these new improvements could go as far as cutting child poverty in half, bringing direct payments to nearly 40 million Americans. Starting July 15th, the plan introduced $3,000 to $3,600 payments per child where eligible and continued monthly payments are planned into the future.
With the credit, the IRS will pay half the total credit amounts in advance monthly payments, meaning even individuals who didn’t claim on their 2020 tax returns actually have the opportunity to apply, with half of the payments being claimed with the 2021 tax return.
If you do qualify, here are some steps to take to use these funds to secure a strong financial future for your child.
- Baby Food, Diapers, and Toys, Budgeting Your Payments! — With any new income source, it’s important to factor it into monthly spending, and budget out your child’s direct needs. Budgeting out necessities like diapers, food, and school supplies, with toys and fun purchases, will help spread those extra CTC dollars.
- Allow For That Allowance, Teach Your Child The Importance of Money! — While most of the funds will be used for day-to-day support or savings, this is the perfect opportunity to start teaching your child about money. By setting up an allowance with some of the funds, you will be able to teach your child the meaning of money, and the importance of saving vs. spending.
- Broken Arms Happen, Keep Some Safe For Emergency Purposes! — As scary or obvious as it is to any parent, kids have a knack for getting rambunctious. That’s why we strongly suggest recipients add some of their return to an emergency fund for their child. That way when the occasional broken arm or small accidents happen, you’ll be ready to focus on getting your child back to health and less on medical bills.
- Open A Secure Savings Account With Great Meadow Federal Credit Union— Of course, one of the most important aspects of raising a child is saving for their future. That’s why we’re standing by to open savings accounts for college, 16th birthday cars, and any other pursuits your child might take with their future. By investing today, you can be sure to save for wherever your child’s life takes them!
The CTC hopes to cut child poverty in half, but remember payments are only the first step. Sign up for an account today, to make the most out of your CTC payments. Be sure to contact us with any questions. We’re happy to get you started on providing the best possible future for your child.