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These FAQs provide general information about a systemic adjustment the IRS is making to certain tax year 2025 accounts to increase the refundable adoption credit when a taxpayer has adoption credit carryforwards available for use in 2025. Please do not call the IRS unless instructed to do so in a notice or letter. IRS phone assistors do not have additional information beyond what is available on IRS.gov.
Background
Beginning with tax year 2025, a portion of the adoption credit may be refundable. For tax year 2025 only, prior-year adoption credit carryforwards available for use in 2025 may be included in determining the refundable portion of the adoption credit, subject to the applicable dollar limits and other adoption credit rules.
The 2025 forms and instructions will not be updated to reflect this treatment. Instead, the IRS is making a systemic adjustment for certain taxpayers whose 2025 return and account information show that they have adoption credit carryforwards available for use in 2025. As a result, eligible taxpayers may receive a refund based on those carryforwards. This adjustment may result in a refund, a reduced balance due, or no change in the amount owed or refunded, depending on the taxpayer’s account.
For additional information, see:
- Topic A: General Information
- Topic B: Eligibility for the Adjustment
- Topic C: Calculating the Adjustment
- Topic D: Forms and Instructions
- Topic E: Amended Return, Form 1040-X
- Topic F: Receiving a Refund, Letter, or Notice
- Topic G: Post-Adjustment Information and Transcripts
Topic A: General Information
Q1. What is the 2025 refundable adoption credit carryforward adjustment?
A1. The IRS is systemically adjusting certain 2025 tax accounts when return and account information shows that the taxpayer had prior-year adoption credit carryforwards available for use in 2025.
For tax year 2025 only, prior-year adoption credit carryforwards available for use in 2025 may be included in determining the refundable portion of the adoption credit, subject to the applicable adoption credit limitations.
Q2. When will the adjustment be made?
A2. Refunds and adjustments are expected to be in late September and will continue until complete. Taxpayers who filed their 2025 return before April 15, 2026, do not need to take any action. Those who filed under extension or have accounts with ID theft indicators, freezes, dependency conflicts, or other issues will have their returns processed once these account issues are resolved and their accounts will be reviewed later in 2026.
Q3. Why is the IRS making this adjustment?
A3. The Treasury Department clarified its interpretation of recent legislation affecting the adoption tax credit. The IRS identified certain 2025 returns where the refundable adoption credit may not have been fully allowed because the calculation did not include prior-year adoption credit carryforwards available for use in 2025. The IRS is making this adjustment systemically so affected taxpayers do not need to file an amended return solely to receive the corrected refundable adoption credit.
Q4. Does this rule apply to all tax years?
A4. No. This treatment applies for tax year 2025 only. Prior-year adoption credit carryforwards available for use in 2025 may be included in calculating the refundable portion of the adoption credit for tax year 2025, subject to the applicable limits.
Q5. Which carryforwards were available for use in 2025?
A5. Unused adoption tax credits can be carried forward for up to 5 years. When you have adoption credit carryforwards from more than one year, the oldest carryforward is used first. For tax year 2025, you may be able to use adoption tax credit carryforwards that originated in tax years 2020 through 2024. Adoption credit carryforwards from before 2020 have expired and can no longer be claimed.
Q6. Will every taxpayer who claimed the adoption credit receive an adjustment?
A6. No. The adjustment applies only to taxpayers whose 2025 return and account information show that the IRS can systemically determine that the refundable adoption credit should be increased.
You may not receive an adjustment if you already received the correct refundable adoption credit, if you do not have adoption credit carryforwards available for use in 2025, or if the IRS does not have enough information to make the adjustment because, for example, you did not file a federal income tax return for tax year 2025 or have never claimed the adoption credit despite being eligible to do so.
Topic B: Eligibility for the Adjustment
Q1. Who may receive the systemic adjustment?
A1. You may receive the systemic adjustment if all the following apply:
- You filed a 2025 Form 1040, 1040-SR, or 1040-NR.
- You claimed or were eligible to claim the adoption credit on Form 8839, Qualified Adoption Expenses.
- You had prior-year adoption credit carryforwards available for use in 2025.
- Your 2025 return and account information show that your refundable adoption credit should be increased.
Q2. Do I need to have a prior-year adoption credit carryforward to receive the adjustment?
A2. Yes. This systemic adjustment applies to certain taxpayers whose refundable adoption credit for tax year 2025 is increased because they have prior-year adoption credit carryforwards available for use in 2025.
Q3. What if I did not claim the adoption credit on my 2025 return?
A3. If you did not claim the adoption credit in tax year 2025 but filed a Form 8839 in tax years 2020 through 2024 that showed a prior year adoption credit carryforward, then you may receive the systemic adjustment. If you did not provide enough information for the IRS to determine your allowable credit, the IRS may not be able to make a systemic adjustment. You may need to file Form 1040-X, Amended U.S. Individual Income Tax Return, with Form 8839 to claim the credit.
Q4. What if I claimed the adoption credit but did not enter a carryforward amount?
A4. If your return did not include your prior-year adoption credit carryforward, the IRS may not have enough information to make the systemic adjustment. You may need to file an amended return to correct your adoption credit carryforward information.
Q5. What if my account has an unresolved issue?
A5. In some cases, the IRS may need to wait to make the adjustment while another issue on your account is being resolved. If this applies to you, you generally do not need to file an amended return just to receive the adjustment. Once the other issue is resolved, the IRS can determine whether your account is eligible for the adjustment and make it at that time, if appropriate.
Topic C: Calculating the Adjustment
Q1. Will I receive a $5,000 refund?
A1. Not necessarily. For 2025, the refundable portion of the adoption credit is limited to $5,000 per eligible child. Your actual refund depends on your allowable adoption credit, prior-year adoption credit carryforwards available for use in 2025, the number of eligible children, income limitations, other adoption credit rules, payments, other credits, and any balance due or offset on your account.
The adjustment may result in a refund of less than the maximum refundable amount, a reduced balance due, or no refund.
Q2. How does the IRS calculate the adjustment?
A2. The IRS uses information from your 2025 return, Form 8839, and your tax account to determine whether your refundable adoption credit should be increased. For tax year 2025 only, this calculation may include prior-year adoption credit carryforwards available for use in 2025.
Q3. Can prior-year adoption credit carryforwards increase my refundable adoption credit for 2025?
A3. Yes. For tax year 2025 only, prior-year adoption credit carryforwards available for use in 2025 may be included in calculating the refundable portion of the adoption credit, subject to the applicable dollar limits and other adoption credit rules.
Q4. Can the adjustment change my adjusted gross income or taxable income?
A4. No. The adoption credit is a credit against tax. This systemic adjustment is intended to correct the refundable adoption credit and related adoption credit amounts. It does not change your adjusted gross income, taxable income, or qualified adoption expenses.
Topic D: Forms and Instructions
Q1. Will the 2025 forms and instructions be updated to reflect this treatment?
A1. No. The 2025 forms and instructions will not be updated to reflect the treatment described in these FAQs.
The IRS will instead make a systemic adjustment for certain taxpayers whose 2025 return and account information show that their refundable adoption credit should be increased.
Q2. Should I change the way I complete the 2025 Form 8839?
A2. No. Complete the 2025 Form 8839 using the form and instructions as issued. Do not alter the form or enter amounts on lines where they do not belong.
If the IRS determines from your return and account information that your refundable adoption credit should be increased, the IRS will make the adjustment systemically.
Q3. What if tax software does not calculate the refundable credit using my prior-year carryforward?
A3. You should follow the instructions provided by your tax software and the 2025 forms and instructions as issued. The IRS will make a systemic adjustment for certain taxpayers whose return and account information show that they are entitled to a larger refundable adoption credit based on prior-year adoption credit carryforwards available for use in 2025.
Q4. Should tax return preparers override the form or software calculation?
A4. Preparers should complete the 2025 return using the forms and instructions as issued. The IRS will make a systemic adjustment for certain taxpayers whose 2025 return and account information show that the refundable adoption credit should be increased.
Topic E: Amended Return, Form 1040-X
Q1. Do I need to file an amended return to receive this adjustment?
A1. No, if your account is eligible for the systemic adjustment, the IRS will make the correction and send you a notice. Do not file an amended return solely to request this systemic adjustment.
Q2. Should I file an amended return if I need to correct another item on my 2025 return?
A2. Yes. If you need to correct another item on your 2025 return, such as your filing status, income, dependents, qualified adoption expenses, employer-provided adoption benefits, adoption credit carryforward amount, or another credit, you may need to file Form 1040-X.
Q3. What if I claimed or could have claimed other credits or deductions?
A3. The adjustment is limited to the adoption credit and related account calculations. If you need to change another credit, deduction, income item, filing status, dependent, or other return item, you may need to file an amended return.
For example, you may need to amend your return if you applied your adoption credit carryforward as a nonrefundable credit and could have instead claimed any of the following credits instead: the District of Columbia First-Time Homebuyer Credit on Form 8859, Residential Clean Energy Credit on Form 5695, Part I, Qualified Electric Vehicle Credit on Form 8834, Alternative Fuel Vehicle Refueling Property Credit on Form 8911, General Business Credit on Form 3800, Credit for Prior Year Minimum Tax on Form 8801, or Credit to Holders of Tax Credit Bonds on Form 8912.
Q4. What if I disagree with the IRS adjustment?
A4. If you disagree with the adjustment, you may need to file Form 1040-X with Form 8839 and any required supporting information.
Q5. I was charged an estimated tax penalty on my 2025 return, but the IRS later increased my refundable adoption credit because prior-year adoption credit carryforwards available for use in 2025 were included in calculating the refundable credit. Will the IRS automatically reduce or remove the estimated tax penalty?
A5. No. The IRS will not automatically recompute or abate any estimated tax penalty because of this systemic adoption credit adjustment. If you were charged an estimated tax penalty and you believe the penalty would be reduced or eliminated after taking into account the increased refundable adoption credit, you may request abatement or refund of the penalty. Follow the instructions in your penalty notice. If you no longer have the notice, you may request abatement or refund by filing Form 843, Claim for Refund and Request for Abatement.
Topic F: Receiving a Refund, Letter, or Notice
Q1. Will the IRS send me a notice?
A1. Yes. If the IRS adjusts your account, the IRS will send a notice explaining the change. Keep the notice with your 2025 tax records.
Q2. If the adjustment results in a refund, how will it be issued?
A2. Any resulting overpayment will be refunded or applied to other outstanding federal tax liabilities or other debts, as required by law.
Q3. Can my refund be offset?
A3. Yes. If you owe certain past-due debts, all or part of your refund may be offset. If your refund is offset, you will receive a notice explaining the offset.
Q4. My refund was offset after the IRS made this adjustment. What if part of the refund belongs to my spouse?
A4. If your refund was reduced because it was applied to certain past-due debts and you believe your spouse is entitled to a portion of the refund, you may be eligible to file Form 8379, Injured Spouse Allocation. See the instructions for Form 8379 to determine whether you qualify.
Q5. I owed tax on my original 2025 return and paid it. Will the payment be refunded if the adjustment creates an overpayment?
A5. If the adjustment creates an overpayment after taking into account payments and credits on your account, the overpayment will be refunded or applied to other outstanding liabilities.
Q6. What if the adjustment reduces the amount I owe but I still have a balance due?
A6. You remain responsible for paying any balance due after the adjustment. The notice will show the revised amount due. Pay as much as you can by the due date on the notice to reduce penalties and interest. If you cannot pay in full, you may be able to request a payment plan.
Q7. Will interest be included with my refund?
A7. If interest is required by law, it will be included in the refund. Your notice or account transcript will show any interest paid.
Q8. Do I need to respond to the notice?
A8. If you agree with the change, you do not need to respond. Keep the notice with your tax records.
Topic G: Post-Adjustment Information and Transcripts
Q1. Where can I see the adjustment?
A1. After the adjustment is processed, you may be able to view updated account information through your IRS Online Account or by requesting a tax account transcript.
Q2. Can I get another copy of the notice?
A2. The IRS may not be able to reissue the original notice. If you no longer have your notice, you can access a copy using IRS Online Account.
Q3. Will Where’s My Refund? show this adjustment?
A3. Where’s My Refund? will not provide information about this type of account adjustment. Review the notice you receive or check your IRS Online Account or transcript.
Q4. What records should I keep?
A4. Keep a copy of your 2025 tax return, Form 8839, any adoption credit carryforward worksheets, documentation of qualified adoption expenses, any employer-provided adoption benefit information, and any IRS notice regarding the adjustment.
Q5. What should I do when preparing my 2026 return?
A5. Use your corrected 2025 adoption credit information, including any corrected adoption credit carryforward to 2026. Keep your IRS notice and updated carryforward worksheet with your tax records so you or your tax return preparer can correctly figure any 2026 adoption credit.
Q6. Does the 2025 adjustment mean my adoption credit carryforward will be refundable again in 2026?
A6. No. These FAQs address a special treatment for tax year 2025 only. When preparing your 2026 return, follow the 2026 forms and instructions.
Q7. How will the systemic adjustment affect adoption credit carryforwards available for future years?
A7. If the IRS increases your 2025 refundable adoption credit by including prior-year adoption credit carryforwards available for use in 2025, the amount of adoption credit carryforward available for future years may be reduced.
To calculate your corrected 2025 adoption credit carryforward to 2026, complete the Nonrefundable Adoption Credit Carryforward Worksheet—Line 18 in the 2025 Instructions for Form 8839. When completing line 8 of that worksheet for this purpose, enter the sum of:
- the amount from your tax year 2025 Form 8839, line 18; and
- the amount of the increase in your refundable adoption credit from the systemic adjustment.
You can determine the amount of the increase in your refundable adoption credit by reviewing the notice you received regarding the adjustment, your 2025 tax account transcript or record of account transcript.Do not use the total refund, reduced balance due, or amount due shown on your notice as the increase in your refundable adoption credit. Those amounts may reflect other payments, credits, offsets, interest, penalties, or account adjustments.
Keep your IRS notice, transcript, and corrected carryforward worksheet with your tax records.