This is ridiculously confusing and just goes to how out of touch the tax code is with what childcare costs. Daycare centers in my area are like $20K a year. So yeah, I've also been stumped on this one and the tax pros could be a bit clearer on the IRS "logic." But basically if you put $5K for a single kid into your FSAs, you get no dependent care credit. We're all sitting there going, well, I spent $20K, subtract the $5K, there's still $15K - why can't that go towards this $3000 credit? The answer is they are saying that you already got a benefit for that kid via pre-taxed FSA dollars that were equivalent/similar in taxable value as the $3000 credit, so now you get nothing. All the wording is irritating as heck, but whatever.
