If you adopted a child between 2020 and 2024 and still had unused adoption credit rolling forward, the IRS may be sending you money you were told you couldnât get. Up to $5,000 per child, and in most cases you donât have to lift a finger.
Most cases. Not all. The families who get skipped are the ones who need to read this.
What changed
Starting with tax year 2025, the Working Families Tax Cuts made part of the adoption credit refundable, up to $5,000 per child. Refundable means you get it back even if you owe no tax. The rest is nonrefundable: it can only cancel tax you owe, and whatever you canât use carries forward for up to five years.
The IRSâs 2025 math left those older carryforwards out of the refundable part. Treasury has now âclarified its interpretation.â For tax year 2025 only, carryforwards from 2020 through 2024 can count toward the refundable amount, still capped at $5,000 per child.
The IRS says it has already started refunds to more than 50,000 taxpayers and expects most to be finished by year end. Its own adoption credit page, as of this week, still says the carried-forward portion âcannot result in a refund.â Read the newer FAQ, not the page.
Who gets paid, and who doesnât
The adoption credit was nonrefundable for years, so a family with a modest tax bill could sit on thousands in credit it couldnât use. For those families, this turns a number on a worksheet into a deposit.
Thereâs a trade. Whatever carryforward turns into cash for 2025 comes off whatâs left to carry into 2026. Cash now beats a credit you might not have the tax bill to use before it expires. Smart trade.
Hereâs the catch. The IRS can only fix what it can see. If your 2025 return didnât list your prior-year carryforward, or you never claimed a credit you qualified for, the IRS says it âmay not have enough informationâ to adjust your account. Its automatic fix covers returns filed before April 15. Extension filers and accounts with identity theft flags, freezes or dependency conflicts get reviewed later in 2026.
Do this
Pull your 2025 return and find Form 8839. Check whether it shows a carryforward from earlier years. If it does and you filed on time, you donât need to do anything. Watch the mail.
If you had a carryforward and it isnât on the return, talk to whoever prepared it about Form 1040-X with Form 8839. The IRS says donât amend just to request the automatic adjustment, so only amend to fix a real gap.
When the notice comes, generally within 30 days of the adjustment, compare it to your return and keep it. Donât watch Whereâs My Refund; the IRS says this adjustment wonât show there. Check your IRS Online Account instead.
Paid an estimated tax penalty on 2025? The IRS wonât remove it automatically. Ask for abatement with Form 843 or by following the penalty notice. And if the refund gets taken for a past-due debt and part of it belongs to your spouse, look at Form 8379.
For how refundable and nonrefundable credits stack, see our tax credits guide.
The fine print
The 2025 forms wonât be updated, and the IRS tells preparers not to override them. Carryforwards from before 2020 have expired. Next year the old rule is back: the IRS says this doesnât make carryforwards refundable in 2026.
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