Currently how I have drafted there return is that the father files as Single and only claims one child and only gets EIC on one child because I can not justify that he supported both children with his income level. Hence I did not feel like the IRS rules allow you to be eligible for EIC on the child he does not claim. This is a rare situation as his business should improve and he will draw a wage as soon as he generates enough cash flow to do so. 

The mother files HOH and claims the other child in which she and the father share plus her college student unrelated to the father that she resides with. 

This seems to make the most sense and appears to follow the IRS rules. I just did not understand why the software calculated EIC on the second child NOT claimed as a dependent?