President Biden’s new Child Tax Care Credit plan is officially in effect and if you qualify, you really want to be sure to take advantage of this opportunity.
Today, we’re going to help you to do just that, by going into the pros and cons of the plan and we’ll even give you some suggestions for getting the most mileage out of this excellent benefit for your children.
So, how does the Child Tax Care Credit break down in simple terms?
Anytime there’s a large government initiative, it seems that some people end up missing out because the language seems hazy or the process has enough red tape to frustrate people from using it.
The Child Tax Care Credit doesn’t have to be one of those, so let’s clear the air right away. Here are the pros of this amazing plan.
Pros of the Child Tax Care Credit
When you break it down, it’s actually quite useful, and as far as government initiatives go, fairly clear when it comes to the benefits.
Here is a breakdown of the program and what it means to you:
- Aims to reduce child poverty – The Child Tax Care Credit has a simple aim. It is designed to reduce the impact of poverty on children for a period of 6 months to one year. The efficacy of the plan is maximized by providing appreciable cash credits payable over time to ensure a regular period of assistance.
- Amounts designed to make a difference – Every child that is under 6 years of age will get $3,600 under this plan, which is $300 per month. Further, for children aged 6 to 17 years old, $3,000 will be given in the form of $250 per month. This is an enormous improvement over the previous $2,000 cap for children up to 16 years of age and opens up many opportunities for families who qualify.
- Distribution methods help reduce the chance of abuse – Half of the credit may be obtained through filing the claim through yearly taxes, with the other half claimed from monthly installments. This is a great idea that should ideally ensure a regular, stable level of assistance over time, but it will need to be used with care if it is to be an effective solution for the covered time.
Cons of the Child Tax Care Credit plan
Every plan has its caveats, though the Child Tax Care plan seems to have been well planned. Here are the perceived caveats of the Child Tax Care Credit plan:
- Temporary solution – This is a temporary solution and is not expected to be repeated next year. As such, it is going to need to be used very carefully and parents would do well to sock away some savings for a rainy day. It’s a great plan but think of it as a financial band-aid and plan accordingly.
- Potential for abuse – Detractors of the plan fear that there will be widespread abuse, with the funds not necessarily going towards the best interests of the children. Many feel that more safeguards should be in place in regards to how it may be spent, but currently, this is not the case and thus a high potential for abuse exists.
Strategies for making the most out of your Child Tax Care Credit
If you qualify for the Child Tax Care Credit act then the next step is going to be making the most out of the program while it is in effect.
We’ve got a few suggestions that can help you to do just that. Let’s take a look at some of the best ideas for getting the most out of your Child Tax Care Credit.
Consider consulting a financial advisor
First off, financial advisors are there to save you money. Despite what you see in the movies, they aren’t just there to help rich people buy stocks. Financial advisors are there to help you make money and keep it.
There might be some options that you have never considered and a single consultation with an expert might be just what you need, especially if both parents are conflicted about how to best use or otherwise distribute this funding.
Shore-up your savings
You will want to put some of the money in a high-yield savings account. If you haven’t got a college fund for your children yet, this is a great opportunity to start.
Alternately, you can simply set up a rainy day fund that can make all of the difference in the world the next time that something unlucky occurs.
Don’t spend all of the funding. You’ll be happy one day that you put a little away, so resist the temptation to spend it all as it comes!
Consider expanding your child’s interests
These additional funds can expand your child’s horizons with a little careful planning. Art supplies, musical instruments… you get the idea. While lessons are expensive, keep in mind that we are living in the information age, so you could purchase a few lessons to get your kids interested, and then free YouTube lessons can help to fill in the gap!
It’s a great opportunity to expand your children’s horizons so this is something to consider.
Teach your kids about finance by giving them some say in how it is spent
Obtain a prepaid debit card and teach your children about finance by getting together and making the spending decisions democratically.
As the parents, of course, you are going to have the final word, but you might let them make the occasional mistake so that they will learn.
The experience of creating and following a budget, when learned at an early age, is beneficial for a lifetime. If you do it carefully, this is a great way to teach the importance of money and planning a realistic budget and this is a lesson that will take them far!
Some final words on the Child Tax Care Credit program
The Child Tax Care Credit is here and you need to take advantage of it before it’s gone. Just remember, this is a temporary thing, so you can’t expect these funds next year.
What you do with them now will help to determine how much they benefit your kids and if everyone uses these funds responsibly then this will greatly affect the possibility of such plans occurring again in the future.
So, if you qualify, take advantage of this program now, and rest assured that this is going to be a great year for you and your children!
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