The child tax credit allows families to cut their annual tax bill by $3,600 per child under age 6 and by $3,000 per child between the ages of 6 and 17. If your family qualifies for the child tax credit, it’s time to think about how you can best allocate the funds and invest on behalf of your child.
At MoneyLion, we’re firm believers that women should play a principal role in family financial planning. Although finance tends to be a male-dominated field, women have an innate knack for handling finances and investing.
Research conducted at the University of California Berkeley’s Haas School of Business found that women outperformed men by 0.94% per year when it came to understanding stock market investments. Another study from Warwick University’s Business School concluded that women were 1.8% more successful investing than men.
In this guide, we’ll go over everything you need to know about child tax credits and why women should be in charge of the child tax credit funds.
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What is the child tax credit?
The child tax credit allows families to lower their annual income tax bill, and in some cases, they can receive a refund. As of 2021, the child tax credit is $3,600 per child under the age of 6 and $3,000 per child between the ages of 6 and 17.
The child tax credit is one of the ways the federal government is extending support to American families. There’s a lot more that goes into child tax credits than the dollar amounts alone, so we’ve answered some of the most common questions for you!
Who is eligible for the child tax credit?
You need to meet certain requirements in order to qualify for the child tax credit, and these requirements including the following:
In order to be eligible for the child tax credit, there are a few requirements that you need to meet:
- Your children must have a Social Security number
- You or your household needs to earn at least $2,500 per year
- Your annual income must be less than $200,000 for individuals and $400,000 for married couples
- Your children must be under the age of 18 at the end of the tax year
- Your children did not provide themselves with more than half of their living expenses
- Your children cannot file a joint return on that particular tax year
- Your children must be listed as dependent on your federal tax return
- Your children must be either US residents, US nationals, or US resident aliens
- Your children must live with you for more than half of the tax year; and
- Your children need to be your:
- Foster child
- Adopted child
- A direct descendant of any of the above mentioned, e.g., your grandchildren.
How much of the child tax credit do you get per child?
The child tax credit changes every year. In 2021, the child tax credit is $3,600 per child under age 6, and for children between 6 and 17 years old, the tax credit is in the amount of $3,000 per child.
When will I receive the enhanced child tax credit?
The IRS will begin sending out child tax credit payments in July 2021.
What If I have another child in 2021?
You’ll still qualify for credits! If you have a baby in 2021, you’ll be eligible for an additional $3,600 as long as you meet the aforementioned requirements.
7 resourceful ways to use the child tax credit funds
When it comes to allocating funds from the child tax credit, we believe parents—especially moms—know best. Most moms play an active role in their children’s lives on top of managing the majority of household activities.
Oftentimes, women tend to see gaps in the household because of their natural motherly instincts. If you’re stuck and can’t think of any ideas on your own, here are some ways to use your child tax credit funds!
Update household appliances
Old household appliances can be a major inconvenience. For example, updating your old fridge can prevent food waste, and a new dishwasher could save you a lot of time in the evenings. Maybe you’re unmotivated to cook because your stovetop takes too long to warm up! Replace your oven and watch how much more fun making dinner becomes.
If cooking homemade dinners means you and your family will eat out a lot less, then you’ll save money over time. Eventually, you’ll see a return on your investments with how much you’re going to save.
Commit to healthy eating
Eating healthy, organic, and fresh food is expensive. Even farmers’ markets aren’t as affordable as they once were. Oftentimes, families are left to compromise on the quality of their food due to their budgets. Dedicating some of your family’s child tax credit funds towards healthier food options is a worthwhile investment.
Make some kid-friendly bedroom updates
If you are like most Americans, it’s likely that your home is endlessly messy. Kids love to leave their belongings sprawled out all over the place, but you don’t have to live with the messiness. Instead, start looking for opportunities to upgrade the communal spaces in your home!
Spending funds on the improvement of your kids’ bedrooms can help improve their organization skills. The best place to start is by looking into storage solutions. For example, try switching out traditional beds for ones that incorporate pull-out drawers or shelves.
Enroll your kids in classes or summer camps
Classes and camps can be a great way to keep kids busy, get them out of the house, give them opportunities to socialize, and teach them new skills. Consider enrolling your kids in art classes or sending them to gymnastics. Better yet, ask your kids to pick a class or activity that sounds fun to them based on their interests. You might also want to send them to a fun camp this summer, which is an amazing chance for your kids to explore the outdoors while also giving you some time to yourself!
Hire sitters or part-time care
Being a working parent is hard enough already, but if your kids are being home-schooled or taking classes remotely due to COVID, it can be almost impossible to concentrate and focus on your own work. That’s where sitters come into the picture!
Babysitters can keep your kids from interrupting your Zoom calls. Sitters will occupy your children so that they don’t interfere with your work, which will also take away some of the stress you feel.
Part-time caretakers can assist you with household chores like doing laundry or cooking, too. They can even give you the freedom to run errands alone or go on date nights. Ultimately, sitters can offer a valuable set of extra hands.
Buy online learning materials
It’s important to invest in the right learning materials for your children. You can use your child credit tax to purchase a new computer with more storage, opt for subscriptions like Adobe Suite to make projects easier, or buy new books for your children to read.
Invest in your children’s future
You can’t go wrong when it comes to investing for your child. While extracurricular classes, learning materials, and babysitters are all helpful for helping your children grow day by day, nothing is more important than preparing for your children’s future.
Putting funds into a MoneyLion Investment account for your children can help them pay for college in years to come or afford a down payment on a mortgage one day. A fully-managed, customizable portfolio for a flat rate of $1 per month is one of the best ways to help your children get ahead.
And guess what? With MoneyLion, you’ll pay zero management fees! Learn more here.
Invest in your family with MoneyLion
Allocating your child tax credit funds appropriately is only a small part of the overall picture. The influx of money granted to you by the child tax credit can offer many perks, but it’s important to maintain smart money practices on a daily basis.
With a RoarMoney bank account from MoneyLion, you’ll be able to manage your child tax credit funds while also budgeting daily and tracking your everyday spending. The best part? You’ll earn rewards on all kinds of everyday purchases!
Give your family a leg up by equipping them with smart banking tools. Learn more from MoneyLion.