Yes you do not report their income on your return. It only goes on their return. That is true for any age dependent. Even babies. Be sure on their return they check the box that says they can be claimed on someone else's return. That is very important! So watch for it. It is under Personal Info.
Yes you can use your Windows CD program. Go up to FILE - NEW. Be sure to save your return first with a name you can tell apart from the child's return.
What do you mean transferring most of the data? You have to start a new return for them. Nothing will transfer. You can only transfer from a 2015 return, which I'm assuming they didn't file one last year.
