We are married but filling separately. I contributed $5,000 to a DC FSA; he did not contribute anything. The full $5,000 was spent. Did I/we exceed the IRS limit?

[kmbb13]

I know that the IRS limit for a dependent care FSA is $5,000 if married filing jointly, or $2,500 per person for married filing separately. We only have one Dependent Care FSA, but only I contribute to it. Did we exceed a limit and/or would we owe taxes on the other half of the $5,000?

[ChristinaS · Accepted solution]

If you and your husband lived together- Yes, the $2500 will be taxed. As long as you properly enter your W2 with Box 10 of $5000, and you visit the Dependent Care Credit section of Turbo Tax- the program will carry the $2500 into your 1040.

If you didn't live with your husband for the last 6 months of 2016, and are eligible to file as Head of Household, then your FSA limit will remain $5000.

This is also assuming that you are claiming the child if filing Married Filing Separately. If your husband is claiming the child, you will need to repay the entire $5000.

[kmbb13]

Thanks, @TurboTaxChristinaS. Do you know where on the 1040 that portion will be added? Does it get added back to my wages, or would it get listed separately as other income?

[kmbb13]

Another question:  When it says, "Pick a dependent and a provider, and tell us how much you paid." -- Do I enter the total amount I paid, or the total minus what we contributed to the FSA?  We paid $5,050.  I contributed $5,000 to the DCFSA.  I know I'll have to pay taxes on $2,500 of that, but do I enter the full $5,050 for that question?

[bine22]

It will get added back to your wages. And you do enter the full amount you paid for daycare. But why are you filing separately? IT is usually best to file jointly

[ChristinaS]

You're welcome, kmbb13- line 7 of 1040 form. Put everything you got in the Dependent Care section. Any costs above the limit are simply not used for the credit/ exclusion- it couldn't hurt to list. It will notate DCB on the line to the left of the line 7 total (wages line). And, yes, as bine22 stated, be sure that MFS is the right choice.