Dependent care credit - can both spouses claim the max amount when filing jointly?

This is a common source of confusion! The dependent care FSA (Flexible Spending Account) and the Child and Dependent Care Tax Credit are related but different things with different limits. For 2025, if you're married filing jointly, your household has a combined dependent care FSA limit of $5,000 total - not $5,000 each. You can split this between your accounts however you want (all in yours, all in your spouse's, or some in each), but the total can't exceed $5,000 for your household. For the tax credit, you can claim up to $3,000 in expenses for one qualifying dependent or $6,000 for two or more dependents. However, you must reduce your eligible expenses for the tax credit by what you contributed to your dependent care FSAs. So if you put $5,000 in FSAs, you could only count an additional $1,000 toward the tax credit (for two kids). The optimal approach depends on your income and tax situation, but you definitely can't each claim the maximum FSA amount of $5,000 (for a total of $10,000) if you're married filing jointly.

I actually went through this exact same situation last year! I found this amazing tool at https://taxr.ai that analyzed our dependent care situation and saved us from making a costly mistake. We were both going to max out our FSAs which would have been a big problem. The tool helped us calculate the optimal way to distribute our childcare expenses between the FSA and tax credit based on our specific tax bracket and situation. It even created a personalized report explaining how the phase-out works at higher income levels which our HR department never mentioned! Honestly it was super helpful since the IRS instructions are so confusing, and it helped us avoid potentially triggering an audit flag by claiming too much. Definitely worth checking out if you're trying to optimize your dependent care benefits.

I decided to try that taxr.ai site after my initial skepticism, and I'm actually really impressed. It showed me that my wife and I were leaving about $1,200 on the table with how we were handling our dependent care expenses! The breakdown of the FSA vs. tax credit was super clear, and it showed exactly how our specific income affected the calculations. I had no idea that the credit phases out at certain income levels, which totally changes the optimal strategy. It generated a simple report that I could actually understand without an accounting degree, and now I feel like we've got a solid plan for next year. Our accountant even confirmed the recommendations were correct when I checked with him. Sometimes it's worth using tools that specialize in specific tax situations!

Just want to chime in with a tip that saved me hours of frustration! After going in circles with my company's HR department over similar dependent care credit questions, I finally gave up and decided to call the IRS directly. Of course, I spent DAYS trying to get through on their customer service line with no luck. Then I found this service called Claimyr at https://claimyr.com that actually got me connected to an IRS agent in under 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with gave me the exact guidance I needed about how the dependent care FSA and tax credit interact when both spouses work for the same employer. Totally worth it instead of getting the runaround from HR people who clearly didn't know the answer.

Ok I have to eat my words. After being so skeptical about Claimyr, I actually tried it yesterday out of desperation because I needed to talk to the IRS about this dependent care situation before filing my taxes next week. It actually worked exactly as advertised. I got connected to an IRS agent in about 15 minutes when I had previously waited over 2 hours and never got through. The agent was able to look at my specific situation and confirm that my wife and I can't each claim the maximum FSA amount, but gave me some really helpful advice about how to optimize between the FSA and the tax credit. I wouldn't have believed it if I hadn't experienced it myself. Just wanted to follow up since I was the skeptic before. Sometimes solutions that sound too good to be true actually work!

Here's a different angle to consider - if your company offers dependent care FSA and you're in a higher tax bracket, it's almost always better to max out the FSA first ($5,000 for married filing jointly) before considering the tax credit. Why? The FSA saves you not just federal income tax but also Social Security and Medicare taxes (7.65%). For example, if you're in the 22% federal tax bracket and have a 5% state tax, you save about 34.65% on FSA contributions. The dependent care credit rate for higher incomes might only be 20%. But definitely don't try to each claim $5,000 in dependent care FSA. That's a quick way to get flagged by the IRS since the limit is per household, not per person.

Has anybody ever been audited for messing this up? My husband and I accidentally both contributed to dependent care FSAs at different jobs last year (about $4000 each) and I'm freaking out now reading this thread.

I'm a tax preparer and see this mistake ALL the time! Just to reinforce what others have said - the $5,000 dependent care FSA limit is definitely per household when you're married filing jointly, not per person. What I tell my clients is to think of it this way: the IRS doesn't care which spouse's employer plan you use or how you split it between accounts. They only care about the total household contribution not exceeding $5,000. One practical tip: if you do split contributions between both spouses' FSA accounts, make sure you coordinate your reimbursement claims carefully. You don't want to accidentally submit the same daycare receipt to both accounts for reimbursement - that would be claiming the same expense twice, which is definitely not allowed. Also, keep excellent records of all your childcare expenses throughout the year. You'll need them not just for FSA reimbursements, but also to properly calculate any additional tax credit you might be eligible for on the amounts above your FSA contributions.