5) Spouse #1 (with higher AGI) will claim the child and open a Dependent Care FSA. From what we can tell, under married filing separately status the max contribution to a Dependent Care FSA is either $5,250 or $2,500. Please confirm.
If you file separately neither of you can claim the Child Care Credit so anything withheld from your wages will be added back on the return.
The law increased 2021 dependent-care FSA limits to $10,500 from $5,000, offering a higher tax break on top of existing rules allowing more time to spend the money.
As more companies adopt the FSA changes, couples can strategize to maximize their tax write-off, financial experts say.
https://www.cnbc.com/2021/05/25/how-couples-can-maximize-their-dependent-care-fsa-.html
6) Spouse #1 already has a Health Savings Account (HSA) established with their Consumer Driven High Deductible (CHDP) Medical Plan. Can Spouse #1 use their HSA in addition to the Dependent Care FSA to pay for child care expenses for child? (due to being on the same tax return. Or are HSA funds only reserved for Spouse #1's medical expenses?) An HSA doesn't pay for child care expenses ... only medical expenses.
https://www.kiplinger.com/article/insurance/t027-c001-s003-can-i-contribute-to-both-an-hsa-and-an-fsa.html
7) Spouse #2 has better and broader health insurance options (HMO) and will add child to their health plan. It seems logical that Spouse #2 cannot use their current FSA to pay for child care expenses since child will be a dependent on Spouse #1's tax return. Please confirm. Again ... the HSA cannot pay child care expenses ... so you can have the FSA and she can have the HSA with the child on it. But once again the money you put into the FSA is NOT deductible on the federal return ... that will be added back into your income on the MFS return HOWEVER it will escape SS & Medicare taxes on the paycheck.
