How Families With Income Up To $ 50,000 Used Child Tax Credit Checks
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New data on monthly child tax credit payments shows how parents earning up to $ 50,000 a year are using the extra money. They invest it.
Monthly checks began in July and include up to $ 300 per child under 6 and $ 250 per month for children 6 to 17.
The payments are part of the expanded temporary children’s tax credit, created by the American Rescue Plan earlier this year. In total, the extended credit can reach $ 3,600 per child under 6 and $ 3,000 per child aged 6 to 17. It is against $ 2,000 per child before the law.
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New search for Investnet | Yodlee, a data aggregation company that provides account aggregation services, examines how families with incomes of $ 50,000 and less spent the first two monthly checks.
Although the extended credit has certain income thresholds, families in this income category are eligible for the full amount.
Envestnet | Yodlee found that these families generally focused on transferring or saving the initial July payments. The second checks issued in August were mainly for securities transactions.
To get these results, the company looked at about 1 million customers at financial institutions representing a mix of those who received the tax credit and those who didn’t, according to Bill Parsons, chairman of the data group. and analysis at Envestnet | Yodel.
âBasically they saved the first and invested the second,â Parsons said.
Research only shows that the funds were transferred to a securities account. It is not possible to say for what purposes consumers were allocating funds, including whether these were short-term or long-term goals.
What the research shows is a marked difference in spending trends compared to the summer of 2020, when government stimulus controls led to an increase in discretionary spending, Parsons said.
Now, recipients of child tax credit checks are more likely to use the money to pay off their credit cards, insurance, mortgages or rent, he said.
However, the second check issued in August showed an increase in investment activity. Certainly, since the data comes from consumer accounts at financial institutions, these individuals may be more inclined to invest the funds than other recipients of child tax credit payments.
The Investnet | The Yodlee team is currently evaluating the September payments data.
The IRS announced on Sept. 15 that it had rolled out about $ 15 billion in monthly advance payments to about 35 million families. Additional payments are scheduled for October 15, November 15, and December 15.
Monthly payments will expire at the end of this year, unless Congress extends the program. House Democrats have proposed to maintain the expanded child tax credit and monthly payments until 2025.