Turn Your Child Tax Credit into a Future Education
As pandemic disruptions become fewer and fewer and the economy begins to heal, millions of American families are set to receive a welcome financial boost. Enhanced child tax credit benefits will hit the bank accounts of eligible households beginning in mid-July. When they do, these families will have a unique opportunity to turn their child tax credits into college savings.
How the New Child Tax Credit Works
The incoming enhanced child tax credit payments are part of a $1.9 trillion COVID-19 relief package signed into law earlier this year.
Under tax credit guidelines, families will receive $3,600 per dependent child under the age of six and $3,000 per dependent child ages 6 to 17. Single parents who are making $75,000 or less per year will receive the full benefit, as will married couples making up to $150,000 and head of household filers making up to $112,500. Beyond these income thresholds, benefits are phased out on an incremental basis.
All eligible families will receive the first half of the child tax credit in six equal installments paid out starting on July 15 through the end of the year. The other half can be claimed when filing 2021 taxes next spring.
You can use this free calculator to determine how much your family will receive. The following examples show estimated payments for families who fall within the eligible adjusted gross income limits:
- A family with two children aged five and under will receive monthly payments of $600 from July to December, as well as a credit of $3,600 on their 2021 tax return.
- A family with one child aged five or under and one child aged six to 17, will receive monthly payments of $550 from July to December, as well as a credit of $3,300 on their 2021 tax return.
Eligibility for benefits is based on your income status in 2020. The IRS estimates that 90% of families with children will receive a benefit (amounting to 66 million children covered).
Putting Your Child Tax Credit to Good Use
All families want to make sure their immediate expenses such as food, shelter, and medical needs are taken care of first. But if your family already has these essential requirements covered, the child tax credit benefit could provide the ideal opportunity to contribute to your child’s future - with a 529 college savings plan.
For families with young children, the child tax credit comes at the perfect time to open an account and allow funds to have the potential to grow as your child grows. Your benefit could provide you with a significant head start to a long-term savings plan.
For families with older children, child tax credit payments may allow you to catch up on contributions and make significant progress toward helping your child pay for a future college education.
Make a Future Scholar Contribution Today!
With Future Scholar, South Carolina’s 529 College Savings Plan, the money you contribute to your account can grow tax-free. And when you need to use your funds for college expenses, your eligible withdrawals are tax-free, too.
Open a Future Scholar account and start investing on the same day! It’s as easy as clicking this link. You’ll only need a few basic pieces of information. Then you can select your investments and make your contribution that will put your child on the path to a bright future.
Already have a Future Scholar 529 College Savings Plan? Simply log in and you’re ready to go. Whether you’d prefer to write a check, schedule a one-time bank draft, or set up a regular and recurring payment from your bank account, the process is quick and easy.