The IRS has begun automatically issuing refunds to more than 50,000 taxpayers who claimed adoption tax credit carryforwards from prior years, with the refund process expected to be complete by year-end.
The Treasury Department clarified its interpretation of the Working Families Tax Cuts regarding the adoption tax credit. Under the new interpretation, for tax year 2025 only, adoption tax credit carryforwards from prior tax years (2020-2024) can increase the amount of the adoption tax credit that is refundable, subject to a $5,000 per qualifying child limitation.
"By issuing refunds without requiring eligible families to file an amended return, the IRS is helping reduce the financial burden on those who decided to adopt a child into their family," said IRS Chief Executive Officer Frank J. Bisignano.
Taxpayers will receive notices generally within 30 days of any adjustment. Those who filed their 2025 returns before April 15, 2026 will generally receive any applicable adjustment automatically. Refunds and adjustments began in late September.