Dependent care flexible spending

The maximum flexible spending contribution is $5,000.

For a married couple who both work, is it the maximum $5,000 for each one so they can together totally contribute $10,000?

I really don't think so but today a client said the HR in his company told him that he could do it.

I don't remember the answer but I had to check for my kids several years ago and I think its addressed in an IRS publication. Also I believe you cannot overdraw the account (unlike a healthcare FSA) so its often better suited for year-round expenses (vs strictly summer camp expenses), which they may not realize.

I think they can each do it with their employer but come tax return time, $5,000 of the $10,000 will be taxable.

I think they can each do it with their employer but come tax return time, $5,000 of the $10,000 will be taxable.

What is the point to do that then?

None

You save the FICA/Medicare of 7.65% (so does the ER) on $5,000 if one of the spouses are under the max.

You save the FICA/Medicare of 7.65% (so does the ER) on $5,000 if one of the spouses are under the max.

Ok, now it does make sense for them to do that.

Don't forget FSA is a use-it-or-lose-it benefit. It would be in the interest of the couple to correct the excess contribution with the employer, at which point, the shortfall in FICA/Medicare will be withheld. In the event that is not done somehow, any excess contribution not forfeited would be trued up on F.2441 and flows back to Line 7. The taxpayer will also not escape medicare tax if they are subject to Additional Medicare Tax.

I am not advocating married taxpayers to abuse the system, I was just pointing out that FICA savings are the silver lining for people who otherwise do not qualify.

Of course, Doug. It's just a discussion to cover all angles.