My wife is not working but we are about to have a second child. For that reason, and because we want our 1st to have more social interaction, we are planning to send her to a part time day care. I realize that anything I contribute to a dependent care FSA will ultimately be taxable because my spouse is unemployed. That said, my employer will match my contributions up to a point. Would it make sense to contribute to the FSA despite it later being taxable? My assumption is that my contribution and the employer contribution would be taxable as regular income when I file my taxes. Is there any reason not to do this in order to take advantage of the employer contribution?
