Getting divorced, my plan was I claim the three kids on my taxes as I am providing 72% of their support. Ex is asking that she claim one of them on her taxes. We are in negotiations. Already filed for 2011 so this would be for 2012 and beyond. Question is I am trying to put a rough value on the cost of a dependent as it relates to federal income tax so I can answer her request. In researching it in my situation I don't see that it matters to much but wanted to double check so let me know if I have my basics right. A dependent is worth $3650 a year on your taxes. This $3650 comes off your adjusted gross income and not of your total tax liability. As your income goes up this becomes a much less impact. For example if your AGI before dependents is $36500 then a dependent lowers your AGI 10%. If you AGI is $150000 then a dependent only lowers your AGI about 2.5%. Granted it lowers it 2.5% at a higher tax rate but the real dollar delta is lower as your AGI goes up. I think this is what they mean when they say a deduction is above or below the line. I believe deductions for dependents is above the line. In my case I thought a deduction was worth $3650 per kid in tax saving but what I found out with my numbers is a kid is worth $800 a year in tax savings to me so about $65 a month. Does this make sense to people who know or did I make a serious flaw?