You can set aside through your employer a maximum of $5000 per year.
Then, when you prepare your tax return, if your qualifying expenses are less than your set aside, the difference is added back your taxable income as if it was not set aside (but there is no penalty).
The maximum dependent care credit is $3000 for one child and $6000 for two or more children, but the credit and the FSA don't stack. For example, if you pay for care of one child and have a $5000 DCFSA set aside, you won't any additional dependent care tax credit. But if you pay for care for two or more children, and you have $5000 DCFSA but your total costs are more than $6000, the top $1000 would be eligible for the tax credit on top of the tax-free benefit of the FSA.
Generally, the FSA is a better deal (saves more taxes) for anyone who pays for care of one child, and for anyone who pays for care of two children when their income is more than about $45,000.
