WASHINGTON — For years, the child tax credit has been given to qualifying parents as one lump sum.
That changes on July 15, when monthly installments of the tax credit will be distributed to parents and guardians for the first time.
Around 39 million families are expected to see money in their bank accounts. Those who qualify for full benefits could see around $300 per qualifying child under the age of 6. For children between the ages of 6 - 17 years of age, parents can expect around $250 per qualifying child.
Benefits phase out for couples making more than $150,000.
However, only half of the tax credit will be distributed over the next six months.
For the moment, the perk only exists for 2021, although Democratic lawmakers are working to make it permanent by including it in the upcoming spending package making its way through the U.S. Senate.
Why you should save it
The tax credit is being celebrated across the country as a way to cut the child poverty rate in the U.S.
The money is meant to help parents struggling to pay for child care or other education-related expense. Parents in need of cash to help with the cost of raising their child should absolutely use it as they see fit.
However, many tax experts say if you don't necessarily need the money right away, saving it for an emergency expense in future years may make the most sense. It especially makes sense for parents who typically owe taxes to the IRS every spring. Since parents are receiving part of the child tax credit ahead of time, there will be less of a credit to offset their tax bill in the spring.
If you don't trust your ability to save or if you are someone who likes the idea of one larger check next year as opposed to six smaller checks, the IRS has created a portal where you can opt-out and let them keep the money temporarily.
The monthly deposits will be distributed on the 15th of every month through December, with the exception of August.
The monthly payment will come on Aug. 13, since Aug. 15 falls on a weekend.