When the US bailout was enacted, it did more than just send out a bunch of $ 1,400 stimulus checks. He also expanded a very important tax credit – the child tax credit.
Previously, the child tax credit was capped at $ 2,000 per child. It is now worth up to $ 3,600 per child. In addition, the credit was previously paid in the form of a tax refund in the form of a lump sum. This year, beneficiaries can receive half of their loan in monthly installments between July and December, with the remaining 50% of the loan being payable in 2022.
So far, two of this year’s six installments have been made in July and August. And this money is useful for a lot of families.
If you are sitting on child tax credit payments, it is important that you use that money wisely. Here’s how.
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1. Build or fill your emergency fund
The pandemic has certainly taught us the importance of having money in the bank for emergencies like unexpected bills and job loss. If you don’t have three to six months of living expenses in a savings account, take the opportunity to increase your emergency fund. Having cash reserves could be your way to avoid going into debt when the unexpected happens.
2. Pay off the debts you have accumulated
Many families took on debt during the pandemic, and some were in debt before it began. If you don’t need your monthly child tax credit payments to cover the essentials, you should take the opportunity to tackle some of your debt. Make sure you focus on credit card balances first, as these tend to charge more interest than other types of debt, like personal or auto loans.
3. Prepare for a better job
There are millions of jobs out there today, and upgrading your skills could be your ticket to landing a better one than you currently have. You can use some of the money from your monthly installments to take a course that will position you for the type of job you want. For example, learning to navigate the world of spreadsheets better could help you move up through the ranks, and a six-hour online course could teach you what you need to know.
4. Make your home more comfortable to work
At this point, many people have been working remotely for around 18 months, and some companies will let their employees do their work from home for the foreseeable future. If so, it might pay off to invest in a setup that will make your work days more comfortable and productive. It could mean buying new office furniture, buying a new laptop or larger monitor, or even just better lighting so that your eyes don’t strain.
While the child tax credit may be worth a lot more money now, the current improvement should only stay in place for the current tax year. Lawmakers are working to keep the extended version in place longer, but there’s no guarantee that will happen. This is why it is so essential that you make the most of this money now, while you still have access to it.