It states that even though I have dependents, I didn't pay for more than 50% of household expenses. How does TurboTax figure that because I did pay more than 50%?

Who are the dependents?   Some dependents cannot be claimed as "qualifying dependents" for Head of Household filing status, even if you can claim them for the credit for other dependents.

 

Am I Head of Household?

 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-filing-status/qualify-head-household-2021/L0NxUtVc2_US_en_US?uid=m5x19jkx

• What is a "qualifying person" for Head of Household?

 

If you qualify as Head of Household, when you enter your marital status (single or married filing separately) into MyInfo, and then enter your qualifying dependent, TurboTax will offer HOH as your filing status.

 

 

 

You told TurboTax that.

1. When you entered your dependents in My Info
2. There was a question which stated under less common situations
3. "He" [] Paid for more than half of their living expenses and other support
4. Be sure this box is not checked

According to my decree, I claim 2 of my 3 children on my taxes.

@ddub20

Are you the custodial parent?  Do you have an agreement with the other parent to allow the other parent to claim them--due to divorce or that you live apart and share custody?  Did one of you sign a Form 8332?

 

If there is a signed 8332 then the custodial parent retains the right to file as Head of Household, get earned income credit and the childcare credit.  The non-custodial parent gets the child tax credit for children under the age of 17.  If the child is 17 or older the non-custodial parent gets the $500 credit for other dependents.

 

If you and the other parent have a signed agreement, you need to indicate in MY INFO that you have such an agreement.

 

As far as the IRS is concerned, the custodial parent is the one with whom the child spent the most nights during the tax year--at least 183 nights.