So sorry! Please see the TurboTax FAQ below for information on what you should do to report the identity theft.
"What to do if you suspect tax-related identity theft"
There is an alternate way to handle it. You (or whomever is legally entitled to claim the child) just files a tax return, claiming the child. The IRS will straighten it out.
If this is a case of some other known person, claiming your your child's tax exemption, rather than actual identity theft, the alternate should be used.
If someone else claimed your child inappropriately, and if they file first, your return will be rejected if e-filed. You would then need to file a return on paper, claiming the child as appropriate. The IRS will process your return and send you your refund, in the normal time. Shortly (up to a year) thereafter, you'll receive a letter from the IRS, stating that your child was claimed on another return. It will tell you that if you made a mistake to file an amended return and if you didn't make a mistake to do nothing. The other party will get the same letter you did. If one of you doesn't file an amended return, unclaiming the child, the next letter, from the IRS, will require you to provide proof. Be sure to reply in a timely manner.
Winner gets the tax benefits; loser gets to pay the IRS back with penalties and interest. The custodial parent almost always wins. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332) or if it's spelled out in a pre 2009 divorce decree.