Most local families will begin receiving a monthly federally-funded child tax credit in July.
The benefit will last until the end of the year and will be based on household income with single parents making $75,000 or less and married couples making $150,000 or less in 2020 earning the full amount per child.
Depending on household income, the payments can be as high as $300 per month for every child in the household under six years of age and $250 per month for those ages 6 to 17.
While the child tax credit is intended to help those who are struggling the most due to COVID-19 and pandemic-related financial problems, the benefit will find its way into the pockets of those not struggling with job loss or income change.
Mississippi Treasurer David McRae is recommending those families who can begin investing the child tax credit money in their children’s future.
“Those families who have more wiggle room in their budget may want to consider investing the payments in a 529 education savings plan,” said McRae. “For as little as $25, families can begin investing in a child’s education. Once invested, the money has the opportunity to grow in value on a tax-advantaged basis.”
According to McRae, the average Mississippi student graduates with $30,000 worth of debt.
“Owing that much can impact nearly every aspect of a young person’s life, which is why about 30 percent of graduates say they’re delaying major life milestones like getting married, buying a home and starting a family,” he added. “Unfortunately, the student loan problem is only getting worse, as tuition rates are rising quickly. In Mississippi, they’ve spiked more than 70 percent in the last decade but families can act now to alleviate all or part of that burden.”
McRae said 529 funds can be applied to a wide variety of things, including tuition, books, supplies and certain room and board expenses.
“If the child doesn’t end up at a traditional two- or four-year college, the money can be applied to apprenticeships and even some certification courses,” said the treasurer. “Even if you don’t use it all, the account can be rolled over to another beneficiary or saved for continued education.”
The child tax credits will begin arriving in bank accounts on July 15. Under current law, the payments are not expected to extend beyond December.
For more information on the Mississippi 529 savings account, visit www.treasury.ms.gov/collegesavings or contact (601) 359-3600.