New Monthly Child Tax Credits Are Starting To Go Out. Here's What It Means For You

Roughly 39 million American families will begin receiving the first of six monthly installments of the enhanced child tax credit payments on Thursday, providing at least temporary relief for households living below the poverty line.

The program is part of the Biden administration's $1.9 trillion economic aid package called the American Rescue Plan that was passed in March. It increases the existing tax benefit from $2,000 up to $3,600 for younger kids and $3,000 for older ones, for the 2021 tax year.

It also broadens the umbrella of who's eligible for the full refund. In the past, approximately 23 million children didn't qualify because their parents made too little income, making them ineligible for a full refund.

The IRS recently introduced an online tool to help low-income families who don't typically file tax returns register for the program.

"For working families with children, this tax cut sends a clear message: Help is here," President Biden said in a statement in May.

How does it work?

Instead of forcing parents to wait until the following year — after filing annual income taxes — the relief checks are an advance on half of what families would typically be entitled to get.

In this case, eligible families qualify for up to $300 per month for each child younger than 6 and up to $250 for each child aged 6 to 17. So a family with three children ages 5, 7 and 16 could see an extra $800 per month in their bank account through the latter half of the year. The credit goes away once a child reaches 18.