REFUND ANTICIPATION LOAN not approved?

You need to make a case to the IRS. They are used to making such determinations. If the mother didn't work at all, she doesn't have to file a tax return and can't claim a dependent. If she made only a little money, she can't support her claim that she's supporting herself and baby. If both parents claim a child, the parent with longer period of being with child wins over the child with shorter time--you. But she has to have income.