When you file your return you'll claim 3 exemptions -- one for yourself and one for each of the children.
For withholding purposes you don't claim exemptions, you claim withholding allowances. If both of the children will be UNDER age 17 as of Dec 31, 2009, you can safely claim 9 withholding allowances. Here's the breakout:
Head of Household Filing Status: 1
Only One Job: 1
Children: 2 (1 each)
Child Tax Credit: 4 (2 per child who will be under age 17 as of the end of the tax year.
If 9 makes you uneasy, drop it to 7 or 8. Anything less than 7 will result in far too much tax being withheld from your pay. You'd get it all back at the end of the year, but it makes no sense to make an interest-free loan to the government when you have 3 mouths to feed.
If any of the kids will be 17 or older as of Dec 21, 2009, adjust accordingly. Of course this also assumes that you will claim the children on your return when you file as opposed to surrendering the exemptions to the other parent.
Instructions printed on Form W-4.
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