by Dana George | Published on Aug. 11, 2021
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As the parent of a disabled child, you may have an additional set of concerns. Here's how the Child Tax Credit can help alleviate them.
The first Child Tax Credits hit bank accounts across the country in mid-July. Suddenly, parents had to decide the best way to use those funds. Unless they opt out, families will receive $300 per month for children under the age of 6 (on Dec. 31, 2021), and $250 per month for children between the ages 6 and 17.
If you have an immediate need for the monthly Child Tax Credit, it's there for you. If you have a child with a disability and do not have an immediate need for the funds, it's possible to make the money work on your child's behalf. It starts by opening an ABLE account.
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ABLE -- an acronym for Achieving a Better Life Experience -- was signed into law by President Barack Obama in December, 2014. The goal was to provide families a way to save money for children deemed disabled. Before The ABLE Act was passed, individuals who received benefits like SSI and Medicaid could not save more than $2,000 without losing their benefits. In addition to impacting their access to healthcare, these individuals risked losing benefits like housing, transportation, and even employment. In other words, having more than $2,000 put away could upend their entire lives.
The ABLE Act makes it possible for disabled individuals to save money without running the risk of losing the benefits that help them achieve independence.
Using an ABLE account to help your child with things they may need later in life is not difficult. It does, however, require that you follow specific guidelines. For example:
Say you open an ABLE account now and fund it with the Child Tax Credits received through the remainder of the year. Maybe you continue to use any Child Tax Credits you receive in the future to build the fund. One day, when your child needs it most to pay for expenses associated with their disability, they have money available -- distributed tax free. Here is a sampling of what your child can use money from their ABLE account to cover:
$250 or $300 per month may not seem like much, but there are plenty of lawmakers pushing to make the expanded Child Tax Credit permanent. If that happens and you have a young child, you have years to build an ABLE account. Even if your child is a young adult, every dollar added to an ABLE account can assist them down the road.
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