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In order to retain valued employees and improve the corporate image, and at the same time gain tax benefits for themselves, many companies offer some type of financial help to employees who must pay for child or dependent care in order to work.
These benefits can take a number of forms.
Employers may also offer a number of other dependent-related services, such as referrals to area day care centers, seminars or informational meetings, or employee assistance programs that provide counseling for personal problems that affect an employee's work. In most cases, these benefits are considered tax-free fringe benefits for employees because they fall into the category of "de minimus" benefits. Their value is relatively small and difficult to measure, so the IRS essentially ignores them when it comes to imposing taxes.