This is such a thoughtful way to handle your stepchild's survivor benefits! I went through something similar when my sister passed and I became guardian of her two kids. A few practical tips from my experience: When you open the CDs, bring your stepchild's Social Security card and specifically tell the bank representative that this is a custodial account funded with the child's survivor benefits. Ask them to read back to you exactly whose SSN will be the primary tax ID on the account - this saved me from the reporting headache others mentioned. Also, keep detailed records of where the money comes from (survivor benefits) and what it's used for. I created a simple spreadsheet tracking the monthly survivor benefit deposits and any transfers to CDs or other investments. This documentation was really helpful when I had questions about dependency status and support calculations. One thing that surprised me was that some banks have special "Representative Payee" account types specifically for people managing Social Security benefits for others. These accounts are designed to keep the beneficiary's funds separate and ensure proper tax reporting. You might want to ask if your bank offers this option. The dependency and tax credit questions you're asking are exactly the right ones - it shows you're being really careful about doing this properly!

I'm dealing with a very similar situation with my stepson's survivor benefits, so this thread has been incredibly helpful! One thing I learned from our tax preparer that might be useful - even though Social Security survivor benefits don't count toward the support test for dependency, you should still keep records of how much you're actually spending on your stepchild's care (food, housing, medical, etc.) versus the amount of their survivor benefits. The IRS can sometimes look at the total picture if there are questions, and showing that you're providing the majority of their actual support (even though the benefits don't count against dependency) can strengthen your position for claiming them as a dependent. Also, regarding the FAFSA question - I found out that if the custodial account is properly set up with the child as the beneficiary, it typically won't count as a parent asset for OTHER children's FAFSA applications. However, when your stepchild eventually applies for FAFSA themselves, those CD accounts will count as their asset, which could potentially affect their aid eligibility. Something to keep in mind for long-term planning. The Representative Payee account option mentioned by Anastasia sounds like exactly what you need to keep everything properly separated and documented!

Wow, this thread has been incredibly helpful! I've been dealing with a similar situation - filed my return in early March and still waiting on a $2,800 refund. I've tried calling the main IRS line probably 20 times with no luck, just like Connor described. I'm definitely going to try the early morning strategy combined with the incorrect SSN trick that Jamal mentioned. That's such a clever workaround! I never would have thought to intentionally enter wrong information to get routed to a human. One quick question for everyone who's successfully gotten through - how long should I expect the actual conversation with the agent to take once I'm connected? I want to make sure I block out enough time and don't have to rush through my questions. I've got my 2022 and 2023 returns ready, plus a list of specific questions about my refund status. Also, has anyone had success with the Taxpayer Advocate Service route? I'm wondering if I should try that first since my situation involves needing the refund for medical expenses (which definitely qualifies as hardship). Thanks everyone for sharing your experiences and actual solutions instead of just venting! This community is amazing when people really need help navigating these frustrating government systems.

I've been following this thread closely since I'm dealing with the exact same issue! Filed my 2023 return in mid-February and still waiting on a $4,200 refund. The "Where's My Refund" tool has been stuck on "processing" for weeks now. After reading all these amazing suggestions, I wanted to share what worked for me this morning. I tried the early morning calling strategy at exactly 7:00 AM Eastern using the main number (800-829-1040). Following Jamal's method, I pressed 1 for English, then 2 for personal income tax, then 1 for questions about a filed return. When it asked for my SSN, I intentionally entered it wrong twice, and on the third prompt it transferred me to a live agent queue! The wait was about 35 minutes, but I finally got through to a real person. The agent was incredibly helpful and discovered that my return was flagged because I had some cryptocurrency transactions that needed additional verification. She gave me a specific fax number to send my crypto transaction records to and said once they receive them, my refund should process within 2-3 weeks. Having all my documents ready (2022 return, 2023 return, all 1099s, and my specific questions written down) made the call so much more productive. The agent even gave me a case reference number to use if I need to call back. Connor, don't give up! The incorrect SSN trick really works, and the key is calling right at 7 AM. Also, definitely emphasize the hardship aspect with your car repairs - the agents have more tools to help when there's a legitimate financial need. You've got this!

Has anyone else had their ERC amended returns rejected? I filed mine with help from one of those ERC specialty firms, and the IRS rejected everything saying we didn't qualify. Now the firm is saying they don't provide audit support unless I pay additional fees! Total nightmare.

This is exactly the kind of situation that highlights why working with reputable ERC consultants is so important. Many of the "ERC mills" that popped up were more focused on volume than actually ensuring businesses qualified. If your amended returns were rejected, you'll want to carefully review the IRS notice to understand their specific objections. Common issues include: not meeting the required decline in gross receipts, failing to demonstrate a qualifying government shutdown order affected operations, or issues with the wage calculations. You should definitely push back on that consulting firm about audit support - any legitimate ERC consultant should stand behind their work, especially if they assured you that you qualified. Many states are also investigating these ERC companies for misleading practices. If you're dealing with an audit or rejection, consider getting a second opinion from a qualified tax professional who can review your original qualification determination. Don't pay additional fees to the same firm that may have gotten you into this mess in the first place.

Anyone know if TurboTax has a specific section for escheated funds? I'm trying to enter mine but can't find anything specific to unclaimed property recovery.

I just went through this exact situation with escheated mutual fund shares worth about $4,200. Here's what I learned from my CPA: The key is understanding what happened at the time of escheatment vs. what happens when you reclaim the funds. When your bond fund was escheated, the state should have received a "basis statement" from the financial institution showing your original cost basis and any unrealized gains/losses at that time. When you reclaim the funds, you're not creating a new taxable event - you're essentially unwinding what should have been reported in the year of escheatment. You'll need to: 1) Get the holder report from the state (as Ben mentioned) - this shows what the financial institution reported 2) File an amended return for the escheatment year if there were unrealized gains that weren't previously reported 3) Report any interest the state paid you as ordinary income in the current year The tricky part is that many people miss step 2. If your bond fund had unrealized gains when it was escheated, those gains should have been reported in that tax year, even though you didn't receive the money then. Contact the state's unclaimed property division and specifically ask for the "holder's report" and any basis information they received.

Has anyone considered the possibility of a 1031 exchange if the trust wants to sell the house but avoid capital gains? Would an IDGT be eligible for that?

This is a great question that highlights the complexity of IDGT planning. One additional consideration I haven't seen mentioned is the potential for valuation discounts when the property was transferred into the trust in 2022. If your father retained a life estate but transferred the remainder interest, the value of that remainder interest for gift tax purposes would have been discounted based on his life expectancy at the time. However, for income tax basis purposes after his death, the entire property value (not just the remainder interest) should receive a stepped-up basis since the retained life estate causes inclusion under Section 2036. This creates a beneficial mismatch where the gift tax value was discounted but the step-up applies to the full property value. I'd also recommend documenting the property's condition and any improvements made while it's in the trust, as these could affect the basis calculation. If your father makes significant improvements to the property while living there, those improvements should also receive stepped-up basis treatment since they're part of the property included in his estate.