INDIANAPOLIS — Next month, parents will receive a tax credit for each of their children under the age of 18.
Monthly payments will begin July 15, and the second half will be applied to people's 2021 tax return. The enhanced Child Tax Credit, which used to be $2,000, is now up to $3,600 per child.
Instead of getting it as a tax refund, people will get a direct deposit of up to $300 per child. Parents can opt out and get it all at once in their tax refund.
Like stimulus checks, there is an income limit. The payments start to phase out for single filers at $75,000 per year or married couples filing jointly at $150,000 per year.
"A great way to use that money if you have children is to set up a 529 plan. Here in Indiana, we call that The College Choice 529," Kyle Benham with Benham Advisory Group said. "There are a lot of other great options. That's going to allow that money to grow and be used tax-free for education expenses or tax deferred in some of the other plans cases."
Benham said those 529 accounts are only as strong as what you put into them. He said it is smart to add monthly automatic payments into that account and let it grow.
The money can be withdrawn if a child does not go to college, but it would be taxed if it is not used for education, Benham said.