Child care is not taxable only if all of the following conditions are met:

• the services are provided at your place of business
• the services are managed directly by you
• the services are provided to all of the employees at minimal or no cost
• the services are not available to the general public, only to employees

If not all of the conditions are met, the taxable benefit is the fair market value (FMV) minus any amount that the employee pays for the service.

When you subsidize a facility operated by a third party in exchange for subsidized rates for your employees, the amount of the subsidy is considered a taxable benefit for the employee.