Are these tiebreaker rules still relevant if there's a court order specifying who claims the children? My divorce decree states I get to claim our daughter in even years and my ex in odd years, but I've heard different things about whether the IRS actually follows these orders.

The IRS doesn't automatically enforce divorce decrees or court orders about who claims dependents - they follow tax law first. However, a court order can be enforced if the custodial parent completes Form 8332 (Release of Claim to Exemption for Child by Custodial Parent) transferring the right to claim the dependent to the non-custodial parent. Without that signed form, the IRS will generally allow the custodial parent to claim the child regardless of what the divorce decree says. This often surprises people. If your decree says you get to claim in even years but you're not the custodial parent, your ex would need to complete Form 8332 for those years to make it work for tax purposes.

Did you ever get your refund? I'm going through this exact situation right now and it's been 6 months with no resolution.

The Recovery Rebate Credit refers specifically to the stimulus payments authorized by Congress during the COVID-19 pandemic. There were three main payments: $1,200 (April 2020), $600 (December 2020), and $1,400 (March 2021). The $1,400 one is what the original poster is asking about. If you didn't receive one or more of these payments when they were initially distributed but were eligible, you could claim them as a "Recovery Rebate Credit" on your tax return for that year. The $1,400 payment would have been claimed on your 2021 tax return specifically.

Thanks for explaining! I'm pretty sure I got all three payments back then, but now I'm wondering if I should double-check my 2021 return just to make sure. I remember getting direct deposits for stimulus money but can't remember the exact amounts or when they came in.

Does the 3-year clock start from when the return was due (April 15) or when you actually filed it? I filed my 2021 return late with an extension in October 2022.

The 3-year statute of limitations for claiming a refund generally starts from the original due date of the return (which was April 18, 2022 for 2021 returns) or the date you actually filed, whichever is later. Since you filed in October 2022 with an extension, your deadline would be October 2025 rather than April 2025. That said, it's always better to handle these things sooner rather than later, especially with something like the Recovery Rebate Credit where you might need to speak with the IRS to verify your eligibility.

Would the district attorney even care about something like this? Seems like they're busy with violent crimes and would see this as a civil matter between family members.

DAs absolutely pursue financial crimes, especially when there's clear documentation of fraud. While violent crimes get more media attention, financial crime units exist specifically for cases like this. The key is having documentation showing intent to defraud. Many DAs have special white-collar crime divisions, and tax fraud cases that are already documented by the IRS are actually easier for them to prosecute. The fact that you've already been assessed by the IRS means half the investigative work is done.

Thanks for mentioning the Taxpayer Advocate Service. I've heard of them but didn't think of contacting them. Would they be able to help even though I did technically agree to have the business in my name? I just didn't understand what I was agreeing to regarding the tax implications. As for innocent spouse relief, we got married after the tax years in question, but I'm worried about our current joint assets. Will look into this immediately.

Does the documentation need to be official court papers? My ex and I have an informal arrangement without anything filed with the court. We just text about scheduling.

No, your documentation doesn't need to be official court papers, although those are helpful if you have them. Text messages about custody exchanges, school records showing your address as the child's residence, medical appointments you took them to, daycare records - all of these can help establish where the child primarily lived. The key is to show a pattern that supports your claim that the child lived with you for more than half the year. Even a personal calendar where you've marked custody days can be useful, especially if it's backed up by other evidence like texts confirming those exchanges happened. Save everything - the more documentation you have, the stronger your case will be if questioned.

How long did the whole process take? I'm worried about my refund being held up for months if something like this happens.

Does the exclusion apply if you inherited only a portion of the house? My sister and I each inherited 50% of our parents' home, but only I lived in it.

That's a great question! If you owned 50% of the home and lived in it as your primary residence for the required time period, you can exclude up to $250,000 of your portion of the gain. Your sister, however, wouldn't qualify for the exclusion on her 50% if she didn't live there. So in this scenario, you would get the step-up in basis on your inherited 50%, plus the potential exclusion if you met the residency requirements, while your sister would only get the step-up in basis on her 50%.

This is actually incorrect advice for inherited property. With the step-up in basis, improvements made by the previous owner don't matter. The basis becomes the fair market value at date of death, which already incorporates the value of any improvements.