You can use the benefits for care that you paid for while your spouse was looking for work, but looking for work is not the entire requirement. In order to exclude the dependent care benefits or claim the child care credit your spouse must have actually found work and had income during the tax year. The requirement stated in the IRS instructions for Form 2441 is the following.
"The care was provided so you (or your spouse if filing jointly) could work or look for work. However, if you didn't find a job and have no earned income for the year, you can't take the credit or the exclusion."
So if your spouse has no income from working (and was not a full-time student or disabled) you are not eligible to exclude the dependent care benefits, and the calculation in TurboTax is correct for your situation.
