The IRS Is Sending Automatic Adoption Credit Refunds: What Families Should Know
If you adopted a child in recent years and carried part of your Adoption Tax Credit forward, the IRS may be sending you money without any action on your part. On October 16, 2026, the IRS announced in news release IR-2026-123 that it has begun issuing automatic refunds to taxpayers who claimed an adoption credit carryforward from prior years. According to the IRS, more than 50,000 taxpayers have already received refunds, with most eligible refunds expected to be finished by the end of 2026.
What Changed
The Adoption Tax Credit helps families with qualified adoption costs, such as adoption fees, court costs, attorney fees and travel. Until recently, the credit was nonrefundable. That meant it could lower the tax you owed, though it could not create a refund on its own. Any unused amount could be carried forward for up to five years.
The Working Families Tax Cuts law made part of the credit refundable, up to $5,000 per qualifying child. Treasury has now clarified how that rule applies to older carryforwards. In tax year 2025 only, carryforwards from tax years 2020 through 2024 can increase the refundable part of the credit, subject to the same $5,000 per qualifying child limit.
Do You Need to Do Anything?
In most cases, no. The IRS says affected taxpayers generally do not need to file an amended return to receive the additional credit. Here is how the IRS describes the timing:
If you filed your 2025 return before April 15, 2026, any adjustment will generally happen automatically.
If you filed on extension, the IRS will review your account later in 2026, after your return is processed.
If your account has an identity theft flag, a freeze, a dependency conflict or another issue, the review will happen after that issue is resolved.
Refunds and adjustments began in late September. They will continue until the work is complete.
Watch Your Mailbox for a Notice
The IRS says you should generally receive a notice within 30 days of the adjustment. The notice will show the amount. It will also say whether the adjustment created a refund or was applied to another tax or non-tax debt. The IRS recommends comparing the notice with your 2025 return and keeping it with your tax records.
You can also check your refund status and view notices through your IRS Individual Online Account.
Be Alert for Scams
News about automatic refunds is the kind of story scammers like to copy. The IRS says it normally contacts you the first time by mail delivered by the U.S. Postal Service. It sends emails or text messages only when you opt in, and a social media direct message is never from the IRS. A message demanding payment right away is a warning sign. If something does not look right, go directly to IRS.gov instead of clicking a link.
Looking Ahead to 2026 Adoptions
In tax year 2026, the IRS lists a maximum of $17,670 in qualified adoption expenses per child, with up to $5,120 of the credit refundable. The full credit is available with modified adjusted gross income of $265,080 or less. It phases down above that level, with no credit at $305,080 or more. The refundable part is claimed on Schedule 3-A (Form 1040), with Form 8839 attached to the return.
How We Can Help
Adoption credits involve carryforwards, income limits and special rules for children with special needs. If you would like help understanding how these rules fit your family's tax picture, our Personal Tax Advisory team can walk you through it. To talk through your situation in detail, Request a Private Consultation.
Sources
This article is for general educational purposes only and is not tax, legal, or financial advice. Tax rules change and every situation is different. Information is current as of October 21, 2026. Upscale Tax Professionals is not a law firm.
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