Even as millions of monthly child tax credit payments go out, some parents are still confused how they work

• New monthly child tax credit payments will be disbursed through the end of the year.
• For qualifying families, that is providing a financial boost to pay for necessities, according to a survey.
• Yet many parents are still confused whether or not they are eligible for the checks, and if they will owe the money back come tax time.

About 36 million American families have received a second batch of monthly child tax credit payments worth about $15 billion.

Yet a survey from personal finance website MagnifyMoney finds that many Americans are still confused about how the payments work.

Those who were most likely to lack clarity were parents with lower incomes. The survey found 26% of parents who earn less than $35,000 and have children younger than 18 did not know whether they were eligible.

Additionally, the survey found that half of parents who are eligible are uncertain as to whether they will have to pay the money back come tax time.

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The new advance monthly child tax credit payments were authorized when Congress passed the American Rescue Plan Act in March. The first two checks were sent out in July and August. Additional payments are scheduled to go out each month for the rest of the year.

The advance monthly payments amount to $300 per child under 6 and $250 per child ages 6 to 17.

In total, the child tax credit was raised to $3,000 to $3,600 per child from the existing $2,000 for qualifying families. The full credit is available to married couples with up to $150,000 in adjusted gross income and single parent families with up to $112,500.

Half of the full sums are set to arrive via the monthly payments, while the rest can be claimed when parents file their tax returns next year.

Admittedly, those terms might trip up some parents, starting with the idea of how this tax credit works.

Unlike the three sets of stimulus checks, which were essentially free money, the advance monthly child tax credit payments will be counted on your tax returns, said Matt Schulz, chief credit analyst at LendingTree, which owns MagnifyMoney.

"There are a lot of people who were super-excited to get these tax payments that may not be as thrilled with them when it comes time to file their taxes next year," Schulz said.

Parents who are worried that the monthly checks could increase what they owe come tax time may want to opt out of the payments.

Low-income families can still sign up online to receive the monthly payments, according to the IRS. However, some might be hesitating because they're afraid they could lose other government benefits or face consequences for not having filed previous tax returns.

Those fears are unfounded, Dorian Warren, co-president of Community Change, a Washington, D.C.-based advocacy group, recently said.

"There's so much money," Warren said. "It's just sitting there on the table."

How parents are spending child tax credit checks

The MagnifyMoney survey found that parents who receive the monthly checks are mostly putting the money toward necessities.

The top three uses for the payments included groceries, with 45%; school supplies, 44%; and savings, 38%.

That was followed by household bills, with 36%; childcare costs or school tuition, also 36%; new clothes or shoes, 33%; housing costs, 31%; paying down debt, 21%; and travel, 6%. (The remaining 2% was categorized as "other.")

The results show that things are still not quite back to normal, Schulz said. If they were, travel would likely rank higher on the list.

"It's a good sign that people are being smart with this," Schulz said. "But it's also a sign that financially people are definitely not out of the woods yet, and things are still pretty tough on an awful lot of parents around the country."

Notably, 82% of parents who have children under 18 said they are in favor of having the monthly child tax credit payments continue beyond 2021.

MagnifyMoney's online survey was conducted between July 21 and 26 and included 1,013 parents with children under 18.

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