IRS Is Sending Automatic Refunds for Adoption Credit Carryforwards

Families who adopted a child and could not use the whole adoption credit in the year they claimed it may now get money back. In an October 16, 2026 news release, the IRS said it has begun issuing automatic refunds to people who carried unused adoption credit forward from earlier years. The IRS reports that more than 50,000 taxpayers have already received refunds. If this sounds like your family, the main task is to watch your mail and match any notice to your 2025 return.

Who is affected

The change reaches individuals who claimed the adoption credit in a past year, could not use all of it because the credit was limited by their tax, and carried the rest forward. Normally the credit is nonrefundable, and the IRS notes that the nonrefundable portion can generally be carried forward for up to five years, after which any unused amount is lost. For 2025, the IRS is allowing those carryforwards from 2020 through 2024 to turn into a refund, up to $5,000 for each qualifying child.

This is a one-year opportunity as described by the IRS. Refunds apply to the 2025 tax year, which is the return most people filed in the spring and summer of 2026.

Effective date and deadlines

The IRS says adjustments started in late September 2026 and will continue until the work is complete, with most eligible refunds finished by the end of the year. How quickly you hear depends on when you filed:

• Filed your 2025 return before April 15, 2026: you will generally receive any adjustment automatically.
• Filed under an extension, or your account has identity theft indicators, freezes, dependency conflicts or other issues: the IRS says it will review these accounts later in 2026.
• Notice timing: a notice is generally sent within 30 days of an adjustment.

The release does not name a form for this process, and it states that taxpayers should not need to file an amended return to receive the additional credit.

What to do now

1. Check your records for the adoption credit. Look at prior returns from 2020 through 2024 for a carryforward amount, usually reported on the adoption credit form with those returns.
2. Create or sign in to your IRS Individual Online Account, which the IRS encourages for viewing records, refund status and notices.
3. When a notice arrives, read it fully and compare it with your 2025 return.
4. Check whether the notice says the adjustment became a refund or was applied to another tax debt or a non-tax debt.
5. Keep the notice with your tax records.
6. If you filed on extension or have an open identity theft issue, expect a longer wait and do not file a second return to speed it up.
7. If the amount looks wrong, or you believe you had a carryforward and heard nothing, ask a tax professional to review your account before you take any step with the IRS.

How it connects to our guides

The adoption credit sits alongside other family tax benefits. Our guide on the child tax credit and dependents explains how a qualifying child is treated for other credits. If a notice does lead you to correct a return, our amended returns guide describes how Form 1040-X works. Families who also save for school can read about education credits and 529 plans. If a letter arrives that you do not understand, start with our IRS help page and the IRS notices library, and read about individual tax preparation if you want a second look at your return.

How we can help

We can compare your 2025 return and your prior-year carryforward amounts with the IRS notice you receive and explain what the notice means. We cannot predict whether a given refund will be issued or when. This is general information and not advice for your personal circumstances.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.