The IRS is holding my return. They told me who used my daughters ssn for deduction & child tax credit. I have sole custody and no father in picture. I had my own place and she was in school so have records now what do I do?

Did they send you a notice? You need to respond to that by the deadline they give you. Read carefully what they want (probably supporting documents to prove the child lived with you).

Once you prove you are entitled to claim your daughter, they will release your refund.

This has become fairly common with electronic filing. When you file the IRS checks to see whether the SSNs used for dependents have been used in another return. If so the electronic filing is rejected. You will have to file a paper return and let the IRS sort it out.