It sounds like somebody has answered the interview questions incorrectly. Only the parent who has physical custody more than half the year can use the child to qualify for head of household, EIC, and the childcare credit.
If you have physical custody more than half the year, you would answer in the program that you had custody seven months or more, (because the program interprets six months as exactly half the year, and you have to have custody more than half the year); you would indicate that another parent is going to claim the child as a dependent; and you would indicate that you are giving the other parent a signed form 8332. This will give your child the “nondependent“ status, and will qualify you to claim the childcare credit, EIC, and head of household. The parent who does not have custody more than half the nights of the year will indicate that they had custody less than half the year by picking five months or less in the program. They will indicate that they will be receiving a form 8332. In that case, the tax program will allow them to claim the $2000 child tax credit, but will not allow them to claim ahead of household or EIC.
If the parent who did not have custody more than half the year is being allowed to claim head of household or EIC, then they answered the interview wrong. This will cause an e-file conflict, and will cause the IRS to launch an investigation. Also, the non-custodial parent must mail a paper signed copy of form 8332 to the IRS within three days after e-filing. This will be indicated in the TurboTax instructions, and TurboTax will tell the taxpayer to print a special cover page (form 8543 I believe) to accompany the custody release form.
