bkarma4life:

If you were married and living together as husband and wife on December 31, 2010, you are considered to be married for tax purposes. The choices you and your husband have in those circumstances are to file a joint return or to file separate returns (as Married Filing Separate). Normally Married Filing Joint is a better option in these circumstances, in which case the two of you can claim both children as dependents.

A spouse can never be claimed as a dependent. Your husband also cannot claim the children if he chooses to file a separate return, because they did not live with him for more than half the year and you lived together at some point during the last six months of the year.

Reference IRS Publication 17.

Okay. Great! Thank you so much. I didnt work so I guess we will be filing the jointly. So, it doesnt matter that we seperated during some of the year? And, since I wont be filing a seperate tax return, he can claim the kids.?

“My question is can he claim the three of us, as in our two daughters and myself.? He paid all the bills and living expenses ------>In general, couples that decide to live separately should have some form of a legal separation agreement. If you are a custodial parent under a court order( I mean if your state recognizes your legal separation) , then those two kids are your depends not his; the custodial parent is the term that is used for the parent that has primary physical custody of a child. Typically the child resides with the custodial parent throughout the year . Then you, as a custodial parent, gets the exemption. However, IRC Sec. 152(e) provides a special rule that allows the custodial parent to release to the noncustodial parent the right to claim the designated child as a dependent. This, in turn, allows the noncustodial parent to claim certain tax breaks associated with the child, i.e., Child tax credit. So, he can only claim them if he either has a court order saying that he can, or if you, the custodial parent of the children, signs a form 8332 and gives it to him saying that he can claim them. He doesn't get to claim them for paying support and carrying their medical insurance.

We never had any legal seperation papers drawn up.. So, would I still need to sign those papers? I didnt work ( so I wouldnt claim them) and we are still married and together now since August 2010..

“We never had any legal seperation papers drawn up.. So, would I still need to sign those papers?”-----> Needless to say, it is up to you; however, legal separation is the solution when you’re neither married nor divorced. As he has already moved out, I guess you need to consider making it legal( by filing your legal documenatation) to protect yourself concerning child custody and support, taxes, and any new debts or etc. that might be incurred. It can also help form a basis for negotiating your eventual divorce settlement.