Your two questions need separate thinking and answers.

1  - Value of dependency exemption. 2004 exemption is $3100 Federal. If you are in 15% tax bracket, that means an exemption is worth 15% of $3100 - $465.00 - as a reduction in the tax you will owe and increase in the refund due you. The value depends on:

     -  Your tax bracket

     -  Child Tax Credit potential - $1,000 but subject to reduction if your income is too high.

     -  Earned Income Credit - again, depending on your income level

2  - Is married separate or married joint better? Usually married joint is better, but not always. The only way to make the determination is to calculate the return both ways - an ardous task if done manually, a relatively simple task with a tax program - provided your expertise with the program doesn't confuse the issue.

And a reminder - the above answers include consideration for ONLY the Federal return.