Taxpayers who filed their 2025 return on an extension are outside the automatic adoption-credit refunds the IRS began sending this fall. The agency’s October 16 announcement, IR-2026-123, says those returns, along with accounts that carry identity-theft indicators, freezes or dependency conflicts, “will be reviewed later in 2026.”
The automatic group is defined by a date. Those who filed their 2025 return before April 15, 2026, the IRS says, will generally receive any adjustment automatically, without sending in anything extra.
Why were extension filers left out?
The IRS describes the excluded group as taxpayers who filed under an extension, plus those with identity theft indicators, account freezes, dependency conflicts or other issues. Their cases will be looked at after the return is processed or the account issue is resolved. In other words, the review depends on the return reaching a finished state first.
That is a different situation from a denial. The release does not say these taxpayers lose the extra credit; it says the review comes later in 2026, on a separate track from the adjustments already going out.
Everyone else got theirs automatically, so why not this filer?
For a taxpayer who filed on extension, the answer is the filing date, not an error on the return. The IRS built the automatic run around returns filed before April 15, 2026, and an extension return falls on the other side of that line. People in the other excluded groups, such as an account with a freeze or a dependency conflict, are waiting on the issue itself to clear.
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What is the adoption-credit change?
The adjustment rests on a new Treasury interpretation that applies to tax year 2025 only. Carryforwards from tax years 2020 through 2024 can increase the refundable portion of the adoption credit in 2025, up to $5,000 per qualifying child, according to the IRS. The agency ties the change to the “Working Families Tax Cuts.”
The credit itself is claimed on Form 8839, and the non-refundable portion can be carried forward for up to five years; whatever is left after that is forfeited. Under the new reading, some of that carried-forward balance becomes refundable cash for 2025.
IRS Chief Executive Officer Frank J. Bisignano said the approach, “by issuing refunds without requiring eligible families to file an amended return,” will “help families access the tax benefits they are entitled to as quickly and simply as possible.”
When does the money arrive, and what comes in the mail?
The refunds and adjustments began in late September and will continue until the work is complete. The IRS expects the process to finish for most eligible taxpayers by the end of 2026, which is also the window it has given for the extension-filer review.
The IRS adjusts affected accounts directly, so taxpayers do not need to file an amended return to receive the additional credit. Taxpayers will generally receive a notice within 30 days of an adjustment. The notice states the amount and whether it became a refund or was applied to another tax or non-tax debt.
The agency’s instruction is short: affected taxpayers “generally do not need to take action.” When the notice arrives, the IRS says to compare it with the 2025 return and keep it with tax records. More detail is on the IRS’s adoption credit announcement, and the agency encourages taxpayers to create an IRS Individual Online Account to view records, check refund status and see notices.
Where does an extension filer stand until then?
The IRS has given a season, not a date: later in 2026. The open question for an extension filer is whether the return has finished processing and whether any freeze or dependency issue is still sitting on the account, since the IRS says the review follows those steps. The free tracking route is the IRS’s own refund status page.
Waiting on an adoption-credit review after an extension?
An extension filer who is not in the automatic group can go weeks with no sign of movement, then receive a notice that says the credit became a refund or was applied to another debt. Reading that letter wrong is the easy mistake.
The IRS Refund Recovery Kit includes a notice decoder and a refund status tracker spreadsheet, and Part 4, “Why It Stalled: The Notice Decoder,” explains what the letters mean when a refund does not arrive on schedule.
Get the notice guide for an adoption-credit adjustment after an extension →
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
