New client owns a Child Day Care and offers FREE child care to clients employees, children. Clients wants to know if there is any tax advantages for this on her S-Corp tax return. Client sited other Corps that do this. Correct me if I am wrong, but if those Corps that are NOT in the Child Day Care business and subsidized their employees day care as an employee benefit, wouldn't that be a business deduction with actual out of pocket expenses vs. the Corp who is in the day care business and donates their services they provide but still will have some exps like food, material etc ? Or is this provided benefit (free child care) to the Day Care Employees become a taxable benefit to the employee?
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It is not taxable
income to the employee. It is normally considered an employee benefit.
The expenses to the company are already included in the normal payroll, utilities, etc. so there is no additional cost to the company. Sure, there might be a small amount for food, etc. but it is already expensed in the normal course of business.AJ, EA -
I seem to remember that for this to be a nontaxable benefit it must be part of a written benefit plan of the company. I have not looked it up in over 12 years, however. Do I remember this right?Comment
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