Tax credit aims to help parents support children through college

It's always been expensive to raise a child, and that's no different in 2018. A new child tax credit could help you reduce some of the expenses, though, thanks to the Tax Cuts and Jobs Act of 2017. The Child Tax Credit is intended to increase in 2018 as well as to increase the number of people who benefit from it.

Tax credits are just one tool used by Congress to help obtain certain outcomes wished by the government. For instance, the original act in 1997 was aimed at helping middle-class families have enough money to raise children in the United States. Over time, that's changed and now, thanks to the newest updates to law, upper middle class families have access to these tax credits, too.

A credit is actually worth what it says on paper, which makes it better than a deduction. Deductions are, generally, not dollar for dollar, but credits are. If you don't owe taxes, the credit could even come to you in the form of a payment from the government.

A good way to use a credit like this is to fund the child's 529, which is a fund in which the money can grow with no taxes applies. If these funds are used for qualified education expenses in the future, no taxes have to be paid, making every investment one with little risk. With around 72 percent of parents putting away savings toward higher education, adding more funds to a 529 could be the right way to guarantee your child a solid education in the future.

Source: Forbes, "How The New Child Tax Credit Might Help You Pay For College," Megan Gorman, May 13, 2018

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