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@Tributos wrote:

daycare expense of $2,100. Parents collected $4,200 in childcare benefits (Box 10 on W-2).

Part III reflects their taxable benefits $2,100 ($4200 - $2100).

Nothing is feeding to Sch 3 to give them any credit; I figure $2100*.2 = $420 should appear.

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There shouldn't be a credit.  The $2100 of expenses were used up by the Dependent FSA on Box 10 of the W-2.  There aren't any additional expenses to be used for the credit.