Adoption credit carryforward? The IRS is sending automatic refunds.
If you claimed an adoption tax credit carryforward on your 2025 return, the IRS may adjust your account and send a refund on its own — generally with no amended return, and generally no action from you if you filed before April 15, 2026. Here is what the IRS actually announced, and the one notice to watch for.
What did the IRS announce?
On October 16, 2026, the IRS said in news release IR-2026-123 that it has already begun issuing refunds to more than 50,000 taxpayers who benefited from the adoption tax credit carryforward. The IRS expects the refund process for most eligible taxpayers to be complete by the end of the year.
What changed for tax year 2025?
The Treasury Department clarified its interpretation of the Working Families Tax Cuts provisions affecting the adoption tax credit. Under that interpretation, for tax year 2025 only, adoption tax credit carryforwards from prior tax years — 2020 through 2024 — can increase the amount of the adoption tax credit that is refundable in 2025, subject to the $5,000 per qualifying child limitation. The release limits this change to tax year 2025.
Do I need to file an amended return?
Generally, no. The IRS says it will adjust affected taxpayers’ accounts to reflect the change and issue any resulting refunds, and that taxpayers should not need to file an amended return to receive the additional credit. Affected taxpayers generally do not need to take action.
How will I know if my account was adjusted?
Watch for an IRS notice. Taxpayers will receive notices from the IRS, generally within 30 days of the adjustment, telling them the amount and whether the adjustment resulted in a refund or was applied towards another tax or non-tax debt. The IRS says to review the notice carefully, compare it with your 2025 tax return, and keep it with your tax records.
When did the refunds start — and who may wait longer?
Refunds and adjustments began in late September and will continue until complete. Taxpayers who filed their 2025 return before April 15, 2026 will generally receive any applicable adjustment automatically. Taxpayers who filed under an extension, or whose accounts have identity theft indicators, freezes, dependency conflicts or other issues, will be reviewed later in 2026, after the return is processed or the account issue is resolved.
What should I do now?
For most affected taxpayers, the next step is simply to watch for the notice and check it against the 2025 return when it arrives. The IRS also encourages taxpayers to create an IRS Individual Online Account to view tax records, check refund status, view notices and make payments online. If a notice does not match your return — or no notice arrives and you believe a 2020–2024 carryforward was on your 2025 return — that is the point to get a licensed CPA to look at the actual numbers. The first call is free.
The bottom line: for 2025 only, an adoption credit carryforward from 2020–2024 can potentially increase your refundable credit, up to $5,000 per qualifying child — and the IRS is making the adjustment itself. Check the notice against your return, and keep it with your records.
Alex Volkov, CPA is a New York-licensed CPA with over two decades in accounting, focused on resolving IRS tax problems — back taxes, liens, levies, garnishments, and audits — for individuals and businesses nationwide.
Got an IRS notice about an adoption credit adjustment?
Compare it with your 2025 return first. If the numbers do not line up, get a licensed CPA to look at your actual notice — the first call is free.
Sources: IRS news release IR-2026-123, “IRS has begun issuing automatic refunds to individuals who claimed Adoption Tax Credit carryforward from prior years” (October 16, 2026; accessed October 17, 2026). Read the IRS release; IRS adoption credit information page, linked in the release as IRS.gov/AdoptionCredit.