It feels like the summer just began, and yet it’s already starting to come to a close as August leads us into another back-to-school season.
The price of new backpacks, notebooks and sneakers — not to mention extracurriculars — can put a strain on many families’ budgets. And as we head back to “reality” after post-pandemic vacations and perhaps less-than-frugal spending, you’re certainly not alone if you’ve started wincing with every swipe of your credit card.
But there are tax savings to be had and another child tax credit payment on the horizon to help ease parents' burden. We'll walk you through both, along with other important money moves for this month. Here's what you need to know in August:
1. Plan back-to-school shopping around tax-free holidays
The price of back-to-school supplies is expected to be at an all-time high this year, so there’s no better time to take care of one of the most costly annual to-dos than during your state’s tax-free shopping holiday.
Every year around this time, select states offer “tax holidays” that allow shoppers to buy school supplies without having to pay any sales tax. This year, 15 states have some sort of back-to-school related tax holiday during the month of August.
Depending on where you live, you can save between 4% and 7% without having to pay state sales tax. The savings will be more in places that include local sales taxes in the shopping holiday.
The National Retail Federation estimates families will spend an average $849 on back-to-school shopping this year. But what counts as school supplies can vary by state, and some states may offer the tax break on items other than traditional school supplies like notebooks and calculators. Shoppers in states like New Mexico or Missouri can make tax-free purchases on clothes, shoes, and computers as well. Be sure to check the specific dates, price limit and products available for the discount in your own state to avoid any surprises at the checkout counter.
2. Unenroll from future child tax credit payments
The second of six monthly child tax credit payments will deposit into parents’ bank accounts on Aug. 13, injecting up to $300 per child into millions of peoples’ budgets. Most parents shouldn’t need to take any action, but if you want to opt out of monthly payments or update your information, take note of these dates:
Deadline(s) to unenroll from monthly payments
If you're reading this after 11:59 p.m. EST on August 2, it is too late to opt out and avoid receiving your August child tax credit payment. That’s because the IRS deadline for avoiding the next (and all subsequent) payments is the Monday before the first Thursday of the month.
If you missed the August deadline, it’s not too late to opt out of the September payment — but don’t put it off for too long: The Monday before the first Thursday of September is actually August 31.
It sounds bizarre for someone to want to opt out of receiving extra cash, but for parents with unusual tax situations, it may be the best way to avoid the unpleasant surprise of a hefty tax bill next spring. To learn more about whether you should opt out, you can read our guide here: Why Some Parents Should Opt Out of Monthly Child Tax Credit Payments.
New feature coming to update portal
Parents will finally be able to update their home address using the Child Tax Credit Update Portal (CTC UP) this month, according to the IRS website, though the exact date is so far unclear.
While the majority of parents have been receiving their monthly payments via direct deposit, this will be most helpful for those who either don’t have a bank account on file with the IRS or just flat out don’t have a bank account. By updating your address, you’ll be able to reroute where your monthly checks are being sent if the first one went to an old or incorrect address.
Eventually, parents will also be able to update their income and number of dependents in the portal, but that feature isn’t expected this month.
3. Use National Financial Awareness Day to your advantage
Aug. 14 is National Financial Awareness Day. Financial awareness is about more than just understanding the basics on how money works. It’s also about evaluating your own budget, savings and investments to make sure your finances are working for your needs. So if it’s been a while since your last financial “check up,” National Financial Awareness Day can be the extra push you’ve needed to finally take a look under the hood. (Regular Money Moves readers can probably skip this step if they already followed our July advice to do a half-year budget check-in.)
“Have your goals changed? I'd review your investments to make sure they still fit your big picture and big goals,” says Tess Zigo, a financial advisor with Emerge Wealth Strategies.
Maybe your priority over the past few years has been saving for a home, but now you’ve made that down payment and want to focus on a new goal, like starting college savings accounts for your children. Or maybe you were once aggressively throwing money at your student debt, but now that you’re nearing the end of paying off those loans, you want to put a portion of that money toward playing catch up with your retirement savings. It’s important to make sure that your budget and investments match up with your goals and your current lifestyle.
4. Prepare for stamp prices to rise
Red alert! You could be paying up to 93 cents more on some types of postage starting August 29.
Okay, so it certainly isn’t the most thrilling news, but if you’re a small business owner whose business relies on mail orders or you’re just someone who loves to send letters the old-fashioned way, you might want to factor this change into your budget. (Or stock up on forever stamps now.)
This is the second postage rate increase that the U.S. Postal Service has implemented in 2021, the first increase having occurred in January. The price of a stamp for a standard letter will be bumped up from $0.55 to $0.58, only a three-cent difference. But if you’re shipping large items, then you may be surprised by the increased fees: The new rates for Media Mail (packages containing books, video tapes, DVDs, etc.) are increasing by up to $0.93 for a 10 lb. package.