if a spouse has no W2 income and the other spouse has contributed to DCAP, is the DCAP contribution taxable? The spouse with no W2 was actively looking for employment.

[KeshaH]

You can use these funds to pay for care while you or your spouse look for work, but for the dependent care benefits to be tax-free, both spouses need to have earned income. The nonworking spouse would need to have secured employment and earned more than the amount of benefits received by the end of the year. The only exception to this rule is if the non-working spouse is disabled for a student.

In your case, your benefits will need to be added back to income both spouses do not have income.