baring other factors. the one in the highest tax bracket should generally claim . if one on you takes itemized deductions then both must. it highly unlikely that your spouse would have enough in itemized deductions to put her taxable income in a lower bracket than yours.
TT on the web has Taxcaster by which you can see the approximate effects of of taking the FSA
is the 42 and 100 gross or taxable income. the reason i ask is that for you if it's gross, the standard deduction (about 12,000) would make your taxable income about 30,000. about 21,000 taxed at 12% and 9000 taxed at 10% . so you would need about 33,000 (?) in itemized to get to the 10% bracket
on the other hand if its taxable income your marginal tax bracket on about 4000 is 22%. while if your wife's taxable is about 100,000 about 18,000 would be in the 24% bracket.
