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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a conversation about money-saving tips.
Then we pivot to this week’s question from a listener’s voicemail:
“Hi, my name is Isabel and I have a question. Since Joe Biden and Congress have put in this $300 or $250 a month spending for child care or other items that you may need for your child, is it a good idea for me to remove my FSA child care contribution, since that's typically what I was using it for? I would really like to know if I need to make any changes. Thank you.”
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can involve both cutting expenses and knowing how to make saving easier for you. Focus on the low-hanging fruit first: Cut subscription services you don’t use anymore, and try to by changing your shopping habits. Then make saving easier by setting up designated savings accounts for specific goals. Think about having one account for your emergency fund, another for car expenses and maybe another for vacations.
On the topic of the — there have been a number of changes to the credit over the past year, so familiarize yourself with what’s new. Currently, this tax credit offers $3,000 per qualifying child who is 6 to 17 years old. It’s the child’s age at the end of this year, on Dec. 31, 2021, that matters here. The credit goes up to $3,600 if the child is under 6 on Dec. 31, 2021. This higher credit is reduced (or phased out) for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household and $75,000 for single filers.
If you qualify, the IRS may begin sending you monthly checks for half of the credit from July to December of this year. Here’s how that might work for you: If you qualify for the $3,000 credit, $1,500 of that could be sent to you in monthly payments of $250 from July to December.
But just because you’re getting this money doesn’t mean you should stop contributing to a flexible spending account, or FSA. Contributing to an FSA can reduce the amount you owe in taxable income.
Have a money question? Text or call us at 901-730-6373. Or you can email us at . To hear previous episodes, go to the