You can use up to $3000 of expenses toward the credit if you have one qualifying child, up to $6000 of expenses toward the credit if you have two or more qualifying children, and up to $5000 on an FSA no matter how many children. Expenses paid with an FSA are not eligible to be applied to the credit also and they reduce the amount of room left under the credit cap.
So, if you had $500 reimbursed by an FSA, then you could have $2500 or $5500 applied to the credit, depending on how many qualifying children. If you had $3500 reimbursed from an FSA, you can't apply anything to the credit if you have one child (you are already over the $3000 limit) but you could apply an additional $2500 of expenses to the credit if you had two or more children.
