I don't think they could file married filing jointly if they were not legally married... that doesn't sound right. Since they have 2 kids, I would let each use a dependant, and whoever makes more money, claim head of household. Then the other file single. The can each use 1 child as a dependant and they will each receive EIC, if they made under the limit for 1 child. If they did, I would say they should receive about 2,500 each, considering they have no other deductions (tuition, mortgage interest, student loan interest, donations, etc.).