A W-2 form is completed by your employer at the end of the year and shows how much money you made during the year. It does not show how many dependents you claimed. However, your W-4 form -- which you submit to your employer so it knows how much to withhold for taxes -- does account for dependents. Each dependent you claim lets you add an extra "personal allowance" on your W-4, reducing the amount of taxes withheld.
You are allowed to claim a personal exemption for each person you will claim as your dependent on your income taxes. For example, if you claim three children as dependents on your income tax return, you can claim three additional allowances on your W-4 form. However, each person can only be claimed as a dependent on one tax return. If you and your spouse are divorced, only one of you can claim that child. If you won't be claiming the child, you can't claim an extra allowance on your W-4.
Penalties for Claiming Too Many Allowances
If you claim too many allowances, you will have too little withheld from your paychecks and owe extra at tax time. The amount withheld for taxes shows up on your W-2. In addition, you could face interest and late payment penalties on the amounts you should have had withheld from your paycheck. Finally, if the IRS determines that you claimed allowances you knew you weren't entitled to, you could face a $500 civil penalty, $1,000 criminal penalty and up to a year in jail.