IRS Begins Automatic Refunds for 50,000 US Taxpayers: Who Qualifies and When to Expect Payment

The Internal Revenue Service (IRS) has begun issuing automatic refunds to more than 50,000 US taxpayers who qualify for additional tax relief related to child adoption, following a change to the rules governing the adoption tax credit for 2025.

Eligible families do not generally need to file amended tax returns to receive the additional money, and the agency expects to complete the process for most qualifying taxpayers by the end of 2026.

The payments relate to adoption tax credits carried forward from previous years. A Treasury Department clarification allows certain unused credits from 2020 to 2024 to increase the refundable portion of the credit on 2025 tax returns, subject to a limit of $5,000 per qualifying child.

Why Is the IRS Issuing Automatic Refunds?

The change concerns families who claimed tax credits for eligible adoption expenses but could not use the full amount in earlier years.

Previously, the IRS interpreted the rules to mean that unused adoption credits carried forward from earlier tax years could not count towards the refundable portion of the credit in 2025. The Treasury Department subsequently clarified its interpretation, allowing qualifying carryforwards to be included in the calculation for that tax year.

Under the revised approach, the IRS is adjusting eligible taxpayers' accounts and issuing any additional refunds due. The process is intended to correct the calculation without forcing families to submit amended returns or navigate another round of paperwork.

'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. 'This administrative change will help families access the tax benefits they are entitled to as quickly and simply as possible.'

Who Qualifies for the Refund?

Not everyone who adopted a child or claimed an adoption tax credit will receive a payment. The adjustment applies to taxpayers whose records show that they qualify for an increase in their refundable credit.

Generally, taxpayers must meet these conditions:

• They filed a 2025 federal income tax return using Form 1040, 1040-SR, or 1040-NR.
• They claimed, or were eligible to claim, the adoption tax credit using Form 8839.
• They had unused adoption tax credits from earlier years that remained available for use in 2025.
• Their tax return and IRS account information show that the refundable credit should increase.

The carryforward must generally originate from tax years 2020 through 2024. Unused adoption credits can normally be carried forward for up to five years, with older eligible amounts used first. Credits carried forward from before 2020 have expired and cannot be included in this adjustment.

Importantly, the $5,000 limit applies to the refundable portion per qualifying child, not to a guaranteed payment for every eligible family. The actual amount depends on each taxpayer's circumstances and account records.

When Will the Payments Arrive?

The IRS began making adjustments in late September 2026 and says the process will continue until all eligible accounts have been reviewed.

Taxpayers who filed their 2025 returns before 15th April 2026 will generally be considered for automatic adjustments without needing to take action. Most eligible cases are expected to be completed by the end of the year.

Those who filed under an extension, or whose accounts have identity theft indicators, freezes, disputes over dependants or other unresolved issues may have to wait. The IRS says these cases will be reviewed later in 2026 after the relevant return has been processed or potential account problems have been resolved.

How Will Taxpayers Know If They Qualify?

The IRS will send a notice explaining any adjustment, generally within 30 days of making it. The notice should state the amount involved and whether the adjustment resulted in a refund or was used to pay another outstanding tax bill or eligible debt.

Taxpayers should compare the notice with their 2025 tax return and keep it with their tax records. They can also check their account information through an IRS Individual Online Account.

The IRS says taxpayers should not use its standard 'Where's My Refund?' tool to track this particular adjustment. Instead, they should check their notice, online account, or tax account transcript.

An amended return may be necessary for some taxpayers if the original filing omitted important information, such as an eligible carryforward amount, or contains another error that needs correcting.