Parents without bank accounts, take note: The IRS will not send any of the upcoming enhanced child tax credit payments via debit cards, according to a Treasury spokesperson.

The payments, which are set to begin on July 15, will be sent to eligible households either by direct deposit or paper check. A portal the agency is set to start in June will include a tool for tracking paper checks, the spokesperson said.

That’s a departure from May, when the agency said it would use the same methods to send the child tax credit payments as it did for economic impact payments, which were delivered by direct deposit, paper check or debit card.

The lack of a debit card option could present a problem for Americans who are unbanked or under-banked, meaning that they don’t have direct deposit or can’t easily or freely cash a check.

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Monthly child tax credit payments start July 15. What to know

“It’s unfortunate that IRS is unable to send debit cards, given that there are some people who do not have a bank account and could surely benefit from not having to go through a check cashing process,” said Elaine Maag,  a principal research associate at the Urban-Brookings Tax Policy Center. Ideally, the IRS would be able to send reloadable debit cards to families — like how some Social Security Administration benefits are disbursed — that would make using the funds easier, she said.

The expanded child tax credit was established in March in the American Rescue Plan. For 2021, the benefit increased to $3,000 from $2,000 per child 17 and younger with an additional $600 for children under the age of 6. Half of the credit will be sent in advanced monthly payments starting July 15; the full benefit will be $300 per month for children under 6 and $250 per month for those between the ages of 6 and 17.

This expansion of the credit will reach more than 65 million children, or nearly 90% of kids in the U.S., according to the IRS. And, if the benefit continues beyond 2021, as Democrats have proposed, it could cut child poverty by 40%, according to a study from the Center on Budget and Policy Priorities.

Still time to update information with the IRS

Because of the positive impact of the benefit, the IRS has been tasked with making sure as many eligible Americans claim the credit as possible.

On Monday, the IRS launched a portal for non-filers to sign up to receive the credit by inputting their information including name, address, direct deposit information, Social Security number and details about children ages 17 and under. This tool is only for people who have not filed a 2019 or 2020 tax return and who did not use the IRS non-filers tool in 2020 to register for stimulus payments.

The agency has also called for help from advocacy groups in making sure that the expanded credit reaches those who need it most, including families that don’t traditionally file a tax return because they do not earn enough, and families without permanent addresses.

To be sure, most families will get the payments via direct deposit and do not need to take any further action ahead of the July 15 start date, if the IRS has received and processed a 2020 or 2019 tax return. Some 80% of households will be getting their monthly payments by direct deposit through the information they’ve already sent the IRS, according to the agency.

Those who have filed their 2019 or 2020 taxes but didn’t elect to get their refund via direct deposit still have time to send the IRS their bank information. In addition, families that have had a change in circumstance that would mean a larger monthly payment still have time to update the IRS on their situation.

The agency will open an additional portal this month where people will be able to update their information if they’ve moved, had a change of bank, had another child, experienced a significant drop in income or need the payment to be sent to another parent.

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