2021 FSA Contribution Limits - Married Filing Separately

[glass_joe]

I know this question has been asked in the forum before, but the answer detoured into "why are you filing married filing separately?" and a discussion about student loans. Hoping to get a clear response on the limits. If I sign up for an FSA at work to cover daycare expenses, how much can I contribute in 2021? I'm married filing separately, but my wife won't be contributing to an FSA through her employer. Can I contribute the full $10,500 or only $5,250? I understand a $5,250 limit per spouse if married filing separately, but would that still apply if my spouse doesn't contribute?

[Opus 17 · Accepted solution]

Yes, the $5250 limit still applies.

To be specific, you can have the plan trustee withhold the full $10,500.  However, when you file your MFS return, the maximum you can exclude from income is $5250, and the overage will be added back to your taxable income (there is no additional penalty).

This means that if you think you might decide to file jointly, I would take the full amount allowed (but not more than the cost of care, of course) because if you do file jointly, you get the full benefit, and if you file MFS, you won't be any worse off than if you had just taken the lower limit.  If you are sure you will file MFS, there's no point in taking more than $5250. 

[glass_joe]

Thank you, Opus 17, for your quick reply!