The VA instructions state, "This is the amount on federal Form 2441 that is multiplied by the decimal amount" (see your quote above).
Line 27 on the 2441 is not the amount that is multiplied by the decimal amount; line 3 is. And where does line 31 come from? Line 31. I will admit that the calculation wanders all over the place, but in my "simple" case, line 27 (your $6,000) is reduced by the FSA contribution amount to produce $1,000, which is lines 31 and 3.
"Enter the amount on which the federal credit for child and dependent care is based" - the federal credit is not based on the FSA amount - this must be removed to calculate the credit.
TurboTax appears to be making the correct calculation, unless you can provide a different interpretation of "Enter the amount on which the federal credit for child and dependent care is based" and "This is the amount on federal Form 2441 that is multiplied by the decimal amount".
Post Script: VA's purpose is to allow a deduction for which you did not already have a tax benefit. The $5,000 for the FSA must be removed, because you already had a tax benefit here - it was removed from Wages in Box 1 on the W-2 before the W-2 was even printed. It was only the $1,000 of the allowed $6,000 that did not receive a tax benefit.
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