My spouse and I both elected a Dependent Care FSA and our combined election exceeds the maximum $5,000 household limit. Can my DCRA account be adjusted or cancelled so we do not exceed the $5,000 maximum amount?
No. Your FSA elections are irrevocable unless you experience a Qualifying Life Event (QLE). While you and your spouse will have your total household salary reduced by the amount of your combined elections, you will also probably receive that full amount in reimbursements.
When you prepare your Federal taxes during the next calendar year, you need to complete Form 2441 Child and Dependent Care Expenses, (attached to Form 1040, Form 1040A, or Form 1040NR) and add the amount in excess of $5,000 back into your income. However, if you have more than $5,000 in dependent care expenses (effectively paid with after-tax dollars since you added it to your income), you may be able to use that additional amount to claim a dependent care tax credit on the Form 2441. Your excess contribution is not "lost" but can still be used to offset some dependent care expenses.
We encourage you to contact your tax advisor if you need further guidance.