My Boyfriend and I both have a FSA account through our employers for the childcare of our daughter and we each opted to do $5000 contribution each, however we just got married last month and I was reading that married couples are only allowed a total of $5000 contribution to a FSA account. With that being said, I want to know if we need to cancel our fsa accounts considering we are already over the amount allowed of $5000 and also I would like to know what happens since we went over the limit but were not married yet. Please advise.
When you go over the combined $5000 limit, the excess amount will simply be taxed as ordinary income. Per the IRS:
If the combined dependent care FSA contributions elected by the spouses exceed the applicable contribution limit for a married couple, contributions for one or both of the spouses may be reduced for the remaining portion of the tax year in order to avoid exceeding the applicable contribution limit. To the extent that the combined contributions to the dependent care FSAs of the married couple exceed the applicable contribution limit, the amount of excess contributions will be includable in the spouses’ gross income as provided in section 129(a)(2)(B).