The Internal Revenue Service (IRS) has begun issuing automatic refunds to over 50,000 taxpayers who had unused balances from the adoption tax credit from previous years, according to an official statement published on October 16.
The origin of the adjustment is a clarification from the Department of the Treasury regarding the Working Families Tax Cuts law, passed in July 2025 as part of the legislative package One Big Beautiful Bill.
Under this new interpretation, valid exclusively for the fiscal year 2025, unused adoption credit balances accumulated between 2020 and 2024 can increase the refundable portion of the credit on that year's tax return, with a limit of 5,000 dollars per eligible child.
Before this clarification, those transferred balances could only reduce the tax owed, but they did not generate a cash refund if the taxpayer did not have sufficient tax liability.
This is not a general reminder about the adoption credit, but rather a specific adjustment for those who had already declared it in previous years without being able to take full advantage of it.
The adjustments began in late September, and the IRS expects to complete the majority before the end of the year, although there are no guarantees for individual timelines.
The good news for affected families is that there is no need to file an amended return: the IRS identifies the corresponding accounts and makes the adjustment automatically.
"By issuing refunds without requiring eligible families to submit an amended return, the IRS helps reduce the financial burden on those who have chosen to adopt a child," stated Frank J. Bisignano, the agency's chief executive.
Those who submitted their 2025 tax return before April 15, 2026, will receive the adjustment automatically.
Those who did it with an extension, or whose accounts show indicators of identity theft, blocks, dependent conflicts, or other issues, will be reviewed later in the year once those incidents are resolved.
The IRS will notify each affected taxpayer, generally within 30 days following the adjustment, with the corresponding amount and an indication of whether the result was a direct refund or if it was applied to another tax or non-tax debt.
The notice should be reviewed carefully, compared with the 2025 statement, and kept in the tax records. If the refund does not arrive immediately, it may be because the adjustment is first being applied to settle any outstanding debt.
The maximum total adoption credit for the fiscal year 2025 amounts to $17,280 per eligible child, although the refundable portion is limited to the mentioned $5,000.
The benefit starts to decrease for modified adjusted gross incomes above $259,190 and completely disappears at $299,190.
The credit applies to national, international, private adoptions, and public guardianship care, but not to the adoption of a stepchild. The minor must be under 18 years old, or be a person of any age with a physical or mental disability that prevents them from taking care of themselves.
To check the status of your adjustment without needing to call the IRS, the agency recommends creating an Online Individual Account, from which you can view tax records, see notices, and check the status of your refund.
The tax changes for 2026 include other updates that are also worth reviewing.
The IRS expects that most of the adjustments will be completed before the end of 2026, which means that many adoptive families could receive their refunds in the coming weeks.
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