[Trishala Raj]

I had enrolled in dependent care benefits FSA and contributed $5000 this last year. I have 2 kids. Age 3 who goes to day care and another 10 month baby who is at home with my spouse. Spouse does not work.

In my w2 box 10, the amount is $5000. The tax software is adding this amount to my wages. Will I be taxed on this amount as my spouse did not work . I just thought that child care expenses I could not claim and that I was eligible for the pre tax dollars in my FSA .

Thanks

[AtlantaTaxExpert]

Sorry, but you should have checked into the rules better before setting up the FSA.

To use the child care FSA, you MUST be eligible to claim the Child Care Credit, and to be eligible, your husband must either work, be attending school at least half-time, or be so disabled that he cannot care for the child.

[ma0641]

One key thing here is "spouse does not work", not "disabled". Why doesn't spouse work or take care of the children?

[AtlantaTaxExpert]

Actually, there are many positive effects of sending children to day care. Studies have shown day care kids tend to have better social skills, are less afraid to try new things, and other positive side effects.

Many parents are advised to put their kids into day care even if one of the parents are always at home.