Question: My husband and I are divorcing. Both of us work outside the home (he earns more than $100,000, and I earn $21,000), and we have one child -- a son aged 6 -- who lives with me. Our lawyers tell us that his support obligation to me is automatically established by support guidelines in our state, but we have been haggling for months over who gets the dependency exemption. My husband's lawyer says he needs it to reduce his taxes, and my lawyer says it will help me more. But neither has come up with anything concrete. How can we resolve this stalemate that threatens to blow up our negotiations?

Answer: The solution to your problem involves more than just the dependency exemption. Since 1998, a child tax credit -- now $500 per qualifying child under age 17 -- may be available. Unlike the dependency exemption which reduces gross income by $2,750 for 1999 (adjusted annually for inflation and subject to being phased out for certain higher income taxpayers), the child tax credit reduces tax liability dollar for dollar.

Since the child dependency exemption is tied to the child tax credit, calculations should be made to see which parent will receive the highest economic benefit. The phaseout for the child tax credit begins at varying levels depending on the taxpayer's adjusted gross income and filing status, while the dependency exemption is reduced gradually beginning at yet another income level.

For older children who are in college, having the dependency exemption is necessary in order to receive benefits under the new education credit and to deduct interest on educational loans.

Since your attorneys do not have a computer program that will allow these calculations to be made, we suggest that they hire a certified public accountant to make the calculations. In this way, the correct economic decision can be made.

Question: My wife and I are in the process of separation and divorce. We both work, and she has told me that she will not file a joint tax return with me next April based on her lawyer's advice. We have two children, and I am paying child support and the premiums on life insurance policies for both children under a court order that was issued earlier this year. Since it is getting near the end of the year, I was wondering about what I must do to entitle me to the dependency exemptions for my children. My lawyer tells me I have plenty of time before my tax return is due and that I should not rock the boat.

Answer: Where divorced parents provide more than half of a child's support between them and have custody of a child for more than half of the calendar year, the custodial parent (that is, the parent who has the child for the greater part of the year) is generally allowed to take the dependency exemption for that child.

However, if the custodial parent signs a written statement agreeing that he or she will not claim the child as a dependent, and the noncustodial parent attaches this statement to his or her tax return, the noncustodial parent can claim the exemption.

Given the fact that your wife has chosen not to file jointly with you next April, the determination of the dependency exemption issue becomes more important and should be resolved to avoid further complications. If you can not agree, depending on the law of the state in which you live, your lawyer may be able to approach the family court to secure an order concerning this issue because in marital or child custody proceedings, family judges may have jurisdiction, to allocate the federal income tax dependency exemption for child to the noncustodial parent.

In any event, your payment of life insurance premiums on your children's lives will not be included in determining the amount of your support for dependency purposes.