To help offset the cost of child-rearing, the U.S. government provides some parents with an annual tax credit that reduces the tax liability of people within certain income limits. Normally, the credit – called the Child Tax Credit – is applied when taxes are filed and the payment typically comes in the form of a tax refund.

The Child Tax Credit has been temporarily expanded under the American Rescue Plan, intended to help stimulate the economy during the COVID-19 pandemic. Under the massive relief bill signed into law by President Biden on March 11, the Child Tax Credit is now available to more families and pays a larger overall amount. In addition, the IRS will now pay half the total credit amount in advance monthly payments and eligible taxpayers can claim the other half when they file their 2021 income tax return.

Some parties in government and elsewhere, are concerned that these new Advance Child Tax Credit payments lack garnishment protection and could be compulsorily applied to outstanding debts carried by families.

Direct Express® Child Tax Credit Protections

Advance Child Tax Credit payments can be routed to Direct Express® cardholders via their card, the same way Economic Impact Payments (EIPs) were in 2020 and early 2021.

Although the IRS has said that Advance Child Tax Credit payments are “not exempt from garnishment by non-federal creditors under federal law,” the payments cannot be taken for federal and state debts such as back taxes or overdue child support.

Federal benefits, including the Child Tax Credit, have special protections against garnishment. For example, the banks of beneficiaries who receive Social Security or Veterans benefit payments by direct deposit are required by law to protect two months’ worth of benefits from garnishment. Need-based benefits, such as Supplemental Security Income (SSI), have full protection from garnishment.

For Direct Express® cardholders, benefit payments are protected the same way. When benefit payments are loaded onto a Direct Express® card, they are automatically protected just like money in a checking account at a bank.

The IRS began disbursing Advance Child Tax Credit payments to families with qualified children on July 15, 2021. Roughly 39 million households — covering 88% of children in the United States — are slated to receive monthly payments.

For more information visit:

Advance Child Tax Credit Payments — Direct Express® Cards (

2021 Child Tax Credit and Advance Child Tax Credit Payments (