I have two daughters who live with me and one has a 4 month old, both girls are still in school and have lived with me all year. They want to file separately due to there meger income. What is best for all parties concerned.

You need to take all the various W-2s, SSNs and other tax documents to your local tax professional and let him/her figure out what is best for all concerned.

That said, it is likely you will claim both daughters and your grand child on your return.