IRS Info on Employment Taxes and Caregiver Navigation Services

Employers may offer caregiver navigation services, helping workers find vital resources. For finance pros, that raises questions about employment taxes.

IRS has provided recent guidance that’ll put your mind at ease if your company offers or is considering offering this fringe benefit.

The guidance came in Fact Sheet 2024-13.

Caregiver navigation services – sometimes called work-life referral services – are considered de minimis fringe benefits, IRS stated in the fact sheet.

As such, the services shouldn’t be included in employees’ gross income and aren’t subject to employment taxes – i.e., FICA, FUTA and federal income tax withholding.

Work-life referral programs are often incorporated into employee assistance programs (EAPs). Of note, the fact sheet covers the tax treatment of work-life referral services, not the services themselves offered through EAPs.

Caregiver navigation services provide employees with guidance, support, information and referrals, covering a range of needs.

Here are some examples of the types of needs, as listed in Fact Sheet 2024-13:

• identifying appropriate education, care and medical service providers
• choosing a childcare or dependent care program
• navigating eligibility for government benefits, including Veterans Administration benefits
• evaluating and using paid leave programs offered through an employer, a state or a locality
• locating home services professionals who specialize in adapting a home for a family member with special care needs
• navigating the medical system, including private insurance and public programs, and utilizing available medical travel benefits, and
• connecting the employee with local retirement and financial planning professionals.

Taxes Not Required

In general, when a fringe benefit is de minimis, employers don’t need to include the value of the perk in wages. That means, of course, there’s no requirement to withhold or pay taxes.

As explained in IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, a de minimis benefit has such little value that accounting for it wouldn’t be reasonable or administratively practical. You’ll need to factor in how often you provide similar benefits to employees as part of the process.

A de minimis fringe benefit can be any property you provide to employees. Or it can be services — caregiver navigation services being one example.