Dependent Care FSA issue (tax year 2018). Amount shown as 'taxable benefits' on MFS return.
My wife and I file MFS. Both my wife and I deferred $2,500 of our income into seperate Dependent Care FSA's. Total daycare expenses exceeded $5,000. I have the higher income and claim our child as a a dependent. I was able to get TurboTax (Windows Premier version for tax year 2018) to count the $2,500 as 'Excluded Income" on form 2441 line 25 for me. However, I am unable to get my wife's return to treat her $2,500 the same way. It shows as 'Taxable Benefits' on line 26 and is adding the amount to her gross income. It seems to be an issue related to "Whose care did you pay for" in the Child and Dependent Care Credit section. Only dependents are listed, however our child is not her dependent but should still be considered a "qualifying person". I know we are not eligible for the Credit, but the FSA should not be considered income. Please advise, thank you!!
