So it turned out that using $0 for last year's AGI allowed the federal e-file to go thru. Thanks a lot for suggesting that. It's really odd that using a technically incorrect number works for the e-file and the technically correct number does not.
I also came across this Turbotax help article https://ttlc.intuit.com/community/rejections/help/what-if-i-entered-the-correct-agi-and-i-m-still-ge..., but it only mentions using $0 for the AGI if you "Filed late last year after mid-November or your return was processed after that time". This does not apply to my situation though. I wonder if Turbotax should also mention using $0 for my children's situation where the prior year's return was the first one ever filed and it was mailed in. But maybe they don't want to be technically incorrect about this in case it doesn't work for some people.
