As reported by Jeff Stein in the Washington Post (May 17):
“The Internal Revenue Service will on July 15 start delivering a monthly payment of $300 per child under 6 and $250 per child 6 or older for those who qualify. The monthly benefits will be deposited directly in most families’ bank accounts on the 15th of every month — or the closest day to that date, if the 15th falls on a holiday or weekend — for the rest of the year, without any action required. For instance, an eligible family with two children aged 5 and 13 will receive $550 from the IRS directly to their bank accounts on or close to the 15th of every month from July to December.”
Fully 88% of U.S. kids qualify, with only the most wealthy not receiving the benefit. “The credit diminishes for individuals with adjusted gross income of more than $75,000, as well as couples earning more than $150,000.”
Until now the U.S. has had one of the highest child poverty levels among rich nations. The Biden administration is addressing this problem with this policy initiative.
How to use this money? For low income families, the money can be used to reduce debts, pay for child care, tutoring, summer activities while parents work and simply to improve the family’s living standards.
Ideally parents can use some or all of the money to invest in their child’s future by opening a 529 educational savings plan. The money grows tax-free and proceeds can be used to pay for post-secondary education as well as K-12 education.
Source: Financial Planning for Women