According to Internal Revenue Manual 25.25.6.1, returns with incarceration indicators are subject to additional scrutiny under the Prisoner Fraud Prevention Program. However, IRM 21.5.6.4.52 also states that taxpayers released during the tax year may experience different processing procedures than those who remained incarcerated throughout. Your return will likely be reviewed, but since you're no longer in the system, it should move through verification more quickly. I'd recommend checking your tax transcript weekly rather than daily - excessive access attempts can sometimes trigger additional verification flags.

Based on my experience working with clients who've been through similar situations, you should expect some processing delay but it will likely be much shorter than what you experienced last year. Here's why: The IRS system automatically flags returns with "yes" answers to the incarceration question, but the key difference now is your current status. Since you were discharged in July and are no longer under any form of supervision, the verification process should be more straightforward. What typically happens: • Your return gets pulled for manual review (usually adds 2-4 weeks) • They verify your current status isn't showing active incarceration • Since you can respond to any correspondence quickly, processing continues I'd suggest filing as early as possible and monitoring your transcript through the IRS website. If you do get stuck in review longer than 6 weeks, that's when I'd recommend using a callback service like the ones mentioned above to speak directly with an agent. The good news is that each year you file without issues, the less scrutiny your future returns will receive. This should be your last year dealing with significant delays from this flag.

Pro tip: Always send these international information forms via CERTIFIED mail with return receipt! I learned this lesson the hard way with my FBAR filing a few years back. Also keep a copy of everything you send, including proof of mailing. The penalties for late filing Form 3520 are insane (either $10,000 or 35% of the gross value of the trust distributions, whichever is greater).

This is exactly why I always recommend keeping multiple forms of documentation when dealing with international tax forms. In addition to certified mail, I also take screenshots of the IRS website showing the correct mailing address on the day I send the form, just in case addresses change or there's any dispute later. For Form 3520 specifically, I've found it helpful to also keep a copy of the trust documents and any correspondence that shows the filing requirement, since the IRS sometimes questions whether certain arrangements actually constitute reportable foreign trusts. The more documentation you have upfront, the easier it is to resolve any issues that come up during processing. Your situation with the ZIP code discrepancy is actually pretty reassuring - it shows the form made it to an IRS facility, which is the most important part. The internal routing between 84201 and 84409 is their problem, not yours!

2 Anyone know if the income thresholds for child tax credit phaseout are different for married filing separately vs jointly? With 5 kids that could make a huge difference in the calculation.

Just want to add another important consideration - state taxes! Some states don't allow married filing separately even if you do it federally, which can complicate things. Also, with 5 kids, don't forget about the Earned Income Tax Credit (EITC) - you lose eligibility for this completely when filing separately, and with that many qualifying children, the EITC could be worth several thousand dollars. I'd also suggest looking into whether any of your kids qualify for the Additional Child Tax Credit, which is partially refundable. The interaction between all these credits gets really complex with multiple children, so definitely run both scenarios through tax software or consult a professional before deciding.

One thing nobody has mentioned - did your husband receive any refund checks from the school during the year? Sometimes when scholarships exceed all charges (qualified and non-qualified), schools issue refund checks to students for the difference. These refunds are definitely taxable even if they came from scholarship money, and students often forget about them when doing taxes because they don't realize they're connected to the 1098-T.

I went through something very similar with my daughter's taxes two years ago. The key thing that helped us was getting what's called a "detailed billing statement" or "account activity report" directly from the bursar's office (not just financial aid). This statement showed every single transaction - what scholarships were applied when, what they paid for specifically, and the exact dates. We discovered that some of her scholarship money had been applied to charges from a previous semester that weren't showing up correctly on the 1098-T. Also, double-check if your husband had any health insurance through the school that was paid by scholarships, or if any scholarship money went toward mandatory student fees that might not be considered "qualified expenses." These details can make a huge difference in what's actually taxable. The school's tax office (if they have one) or a tax professional who specializes in education credits might be worth the consultation fee to avoid overpaying. Don't just rely on TurboTax's calculations without verifying the underlying numbers first!

Something that confused me when my kid was in school - the 1098-T doesn't always match the calendar year expenses! My son's spring semester payment was due in December 2023, but the university reported it on the 2024 1098-T because that's when classes started. This messed up our tax calculations for both years! Also, don't forget that the American Opportunity Tax Credit is available for FOUR years, not just four school years. So if your program takes 5 years, you still only get it for 4 tax years. We learned this the hard way.

I'm dealing with a very similar situation with my twin daughters who are both college sophomores. One key thing I learned from our tax preparer is that even though you didn't receive a 1098-T, you should still keep detailed records of ALL your educational expenses throughout the year. Here's what many people don't realize - just because your tuition is covered by grants doesn't mean you can't have ANY education tax benefits. If you or your family paid for required course materials, lab fees, or other qualified expenses out-of-pocket, those could potentially qualify for education credits even when tuition is fully covered by aid. Also, regarding the excess aid in your checking account - the IRS looks at how you actually used those funds, not just the fact that you received them. If you can document that the money went toward qualified educational expenses (required textbooks, supplies, equipment mandated by your courses), then that portion remains tax-free. Only the portion used for non-qualified expenses (like personal spending, entertainment, non-required items) would potentially be taxable income. I'd recommend starting a simple spreadsheet now to track every educational expense you pay out-of-pocket, even small ones. This documentation could be valuable for future tax years, especially if your financial aid situation changes.