Greta
Level 9

Both children live 65% with wife. So wife can claim child care (Form 2441) for both children?

She takes child credit for just one child (assuming that's what legal verbiage "dependency" means).

If eligible, she takes EIC for both.

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BobKamman
Level 15

Is the "dependency" contingent on him being current on child support?  Is he?  But yes, that sounds right. You shouldn't call her "wife" now.  And if she hasn't already given the ex a signed Form 8332, she should do it now -- for the current year only, not for all future years.  

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Camp1040
Level 10

It does not matter what the divorce decree states for IRS purposes  (although wife could be held in contempt of court).

The dependency deduction goes to who ever the child or children spent more that 50% of the nights throughout the year, and you have already determined 65% for the wife. If she wants to be in compliance then she must do as  @BobKamman  said and complete the release of exemption form.