NEW YORK (CNN/Money) - About 25 million American parents, people more used to paying out than taking in, started receiving something extra in their mail boxes last month: tax-credit checks of $400 per child.

When the Jobs and Growth Tax Relief Reconciliation Act of 2003 passed earlier this year, the federal child-care tax credit increased to $1,000 from $600 for each minor child a taxpayer claims as a dependent. Congress, aiming to give the ailing economy a shot in the arm, voted to make the extra $400 available quickly.

Recipients don't have to do a thing to get their checks; they'll go out automatically in three waves.

The check's in the mail Child tax credits are to be mailed out according to the last 2 digits of the recipient's Social Security number. Last 2 digits  Mailing date  00 to 33  July 25  34 to 66  August 1  67 to 99  August 8   Source:  IRS

The first series of checks were mailed on July 25 to parents whose Social Security numbers end in 00 through 33. The next went out on August 1 to those with numbers ending in 34 through 66, and the last is scheduled for release on August 8 (67 through 99).

Some taxpayers who filed returns after the April 15 deadline, including ones who applied for automatic extensions, will not receive checks until later in the year. The Treasury Department will continue to issue payments through December.

(To estimate how much you'll save under the new tax law, click here.)

Eligibility standards require children to be U.S. citizens or residents born after 1986, that they be claimed as the taxpayers' dependents, and be the taxpayers' children, stepchildren, adopted children, or grandchildren.

They can also be siblings, stepsiblings, or nieces and nephews whom the taxpayers cared for as their own dependents. Certain foster children are also eligible.

Parents of children born in 2003 won't get the advanced payment. Moreover, the $1,000 child tax credit begins to phase out above certain income levels:

• Adjusted gross income for couples filing jointly of $110,000 or more;
• For couples filing separately, $55,000 or more for the spouse who's claiming the child on his or her return;
• And $75,000 for single-parent filers;

For every $1,000 of income greater than the above income figures, you'll lose $50 of the credit. For example, a one-child household with a 2002 adjusted gross income of between $110,001 and $111,000 will be eligible for a $950 credit and get a $350 check. Those earning more than $129,000 aren't eligible for any of the $1,000 credit.

2002 ADJUSTED   GROSS INCOME:   Less than $10,000 $10,000 to $20,000 $20,000 to $30,000 $30,000 to $40,000 $40,000 to $50,000 $50,000 to $75,000 $75,000 to $100,000 $100,000 to $200,000 $200,000 to $500,000 $500,000 to $1 million More than $1 million ESTIMATED   SAVINGS:    Click here for calculator assumptions  Source: Urban-Brookings Tax Policy Center

The law also provides for an Additional Child Tax Credit, for individuals who get less than the full amount of the Child Tax Credit because their taxes are too low. This stipend varies case-by-case, as figured on Form 8812, and may result in a refund even if the person does not owe any tax for the year. IRS spokeswoman Janene Howell, says that in a typical case, a parent making $16,000 a year with one child would receive $275.

The Treasury will mail checks to the address on your last tax return, so if you've moved, fill out a change-of-address form with the post office. If you don't receive a check, keep calm; you won't miss out. The worst-case scenario is that you can claim the credit on your return when you file early in 2004.

Hold on to all the paperwork that arrives with the check; you'll want it when you file your 2003 return.

Among Americans who expect to receive a child tax credit check, 45 percent plan to use the extra cash to pay off bills, according to a June 27-29 Gallup poll. Meanwhile, 31 percent of those surveyed said they plan to save or invest the money.

Only 22 percent will spend their tax boon, while just 1 percent will donate it to charity.

Today millions of child tax rebate checks are going out in the mail. CNN's Skip Loescher reports. Play video (Real or Windows Media)

Although the Bush Administration hopes taxpayers will spend the money, household finance experts say you should first pay off high-interest debt, namely credit cards. Next on your list of priorities should be building up an emergency savings fund, if you don't have one already.

Been there, done that on both counts? Consider investing your gift from the IRS in such a way as to avoid paying taxes down the road. If you invest your $400 child tax credit in a 529 college savings plan that earns 10 percent a year over 18 years, you'll have painlessly saved $2,200 for college.

Of course, if parenthood and patriotism motivate you, there's always the mall.