Is there a way to prevent my sister's estranged father, who hasn't been involved in her life since she was 12, from claiming her and her baby on his IRS taxes this year, potentially leaving her with nothing? He never formally relinquished parental rights, and we're looking for guidance on how to handle this situation.

Your sister can try to get an Identity Protection PIN for herself; it will be harder to get one for her child:

Get An Identity Protection PIN (IP PIN)

Who does your sister and her baby live with? The person with primary claim for a child is usually the custodial parent, which is the parent the child lives with for more than 1/2 the year (183 days or more). If the other parent claims a child when they aren't supposed to, the custodial parent needs to file a tax return on paper claiming the child. But sometimes it's not that easy if the custodial parent doesn't work and aren't filing tax returns; someone else (perhaps a grandparent) might actually be the person entitled to claim the child as a dependent.

The non-custodial parent can claim a child, but only with permission from the custodial parent. The custodial parent can give the non-custodial parentForm 8332, but there's no requirement for them to do so.

In this situation IRS usually won't do anything unless the other parent or whoever has the right to claim the child sends in a tax return on paper claiming the child. The IRS e-filing system blocks a SSN from being used more than once, so sometimes people think that means they can't claim the child and give up. But it's still possible for whoever should be claiming your sister to file or amend the last three tax returns (2020 - 2022) and claim your sister.

If your sister and baby with with your mother (just guessing), your mother probably is the person who is entitled to claim them both as her dependents. Even though your sister is now a parent, she probably still qualifies as a dependent of your mother. She should file a tax return ASAP to prevent your sister's father from claiming either of them on his taxes.

Your family might want to go to a free tax preparation program if they want to amend previous years to add your sister; the in-person sites are usually open Feb 1 through April 15, so check the locators late December or early January:

Free Tax Return Preparation for Qualifying Taxpayers