"Correct me if I'm wrong, but my wife not working has nothing to do with the FSA funds being taxable." - your wife not working has everything to do with the FSA amount being taxable.
"I'm not looking for the dependent care tax credit, just want to make sure my FSA are not taxable." - Unfortunately, the FSA credit calculations are intermixed with the dependent care credit, all on form 2441.
@Mike9241 gave an excellent answer above. You cannot take the box 10 (W-2) amount as an exclusion to income, unless you show that the expenses are qualified in the dependent care interview.
But because your wife was not working, you don't qualify for this anyway, so TurboTax did not show you the interview. Next year, unless your wife if working, you should not ask your employer to defer some of your salary to the FSA.
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