When MFS, you can't use the dependent care credit at all, and the maximum allowed DCFSA deferral is $2500. Additionally, only the spouse who claims a child can use the account at all.
If you only have one child, you should request full reimbursement, and you need to claim that child as a dependent. The excess reimbursement will be added back to your taxable income but there is no additional penalty. If you don't claim the child as a dependent, the entire $5000 reimbursement will be added back to your taxable income.
If you pay for care for 2 or more children, you lost the tax advantage of your spouse's FSA. You could have claimed child A and up to $2500 of tax-free DCFSA, and your spouse could have claimed child B and claimed up to $2500 of tax-free DCFSA. At this point, you and your spouse can only use the $2500 exclusion that you are allowed.
There is no action to take. You can't modify your FSA after your open enrollment period unless you have a qualifying life event (marriage, divorce, death in the family, birth of a new child).
I have previously discussed the pitfalls of filing MFS to get lower loan payments. Briefly,
- many tax deductions and credits are disallowed
- you potentially lose thousands of dollars a year on your taxes, which offsets the loan payment savings
- this tax loss lasts as long as you file separately for IBR, up to 25 years
- even if you qualify for PSLF, it takes 10 years or longer, and the student loan bureaucracy is very stingy about actually approving PSLF applications
- to qualify for PSLF, you may be locked into a job or career you don't like
- if your loan is forgiven, the remaining balance becomes taxable income at that time, and the tax on the loan balance, plus all the extra taxes over the previous 10 years, may offset the loan payment savings.
Basically, filing MFS to get IBR is a risky bet at best. You will pay a lot more in taxes now and later than you may realize.
Unless the Democrats muster enough political willpower to forgive your loans (making all the plumbers and carpenters who never went to college pay your debts), filing MFS to get IBR is probably a lot worse in the long term than you think.
Good luck.
