You do not have to delete your W-2. There should be an option to compare it with Split returns Option.

Since his income is low, his claiming the children may not be as beneficial as if you were to claim(provided your income is not too high).

Infact, from the details so far, I would say that married filing jointly would be more beneficial for you.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

It is possible that no federal taxes were taken out since you claimed more number of allowances.

Regarding refund going down to $1500 - if you both file separately it is possible that you both will end up paying or getting even lower than $1500 (combined together).

Married filing separately is at a higher tax rate, the standard deduction is lower and certain tax credits are not available if you file married filing separately.

Link to an article for your reference-

http://taxes.about.com/od/filingstatus/qt/marriedseparate.htm

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.