Fringe Benefits & Extra Compensation

What Counts as Taxable Income for Au Pairs

All payments and benefits received from a host family are subject to federal income tax unless specifically excluded. The weekly stipend is the primary form of compensation, but additional cash or in-kind perks are also taxable income in most cases.

Cash Payments

Any cash payments beyond the weekly stipend — gym reimbursements, phone stipends, holiday bonuses, birthday money, end-of-year bonuses — are taxable wages. They are additional compensation on top of the stipend.

Like the stipend itself, these extra cash payments are exempt from Social Security and Medicare taxes (FICA) because the au pair's J-1 nonresident alien status drives the FICA exemption, not the nature of the payment.

Room and Board

Room and board is explicitly excluded from au pair wages. It is treated as a condition of employment under the J-1 program, not as compensation.

Gym Membership

A gym membership paid by the host family on behalf of the au pair is generally a taxable fringe benefit that must be included in gross wages (IRS Publication 15-B). The one exception: if the host family provides access to an on-premises athletic facility (a home gym), the fair market value does not need to be included.

Phone or Phone Plan

A phone provided primarily for work use (staying reachable during childcare duties) can qualify as a nontaxable working condition fringe benefit. But if the phone is clearly for personal use, it is taxable. Since 2010, the IRS has been relatively lenient on phones provided to employees when there is a legitimate business reason.

Education Benefit ($500)

The $500 educational allowance required by the J-1 program is not taxable. It is a mandatory component of the program, not discretionary compensation. The IRS lists the $500 for classes alongside room and board as standard program components and does not flag it as taxable wages. There is also solid legal footing under IRC §127 (employer-provided educational assistance up to $5,250/year is excludable).

Personal Use of Host Family's Car

Personal use of a host family's car is a taxable fringe benefit. This is one of the more carefully regulated fringe benefit areas.

What Counts as Personal Use

Any driving not directly related to childcare duties is personal use: visiting friends, shopping for yourself, weekend trips, personal errands. Driving to pick up the kids or run childcare-related errands is business use and not taxable.

How to Value Car Use — Cents-Per-Mile Method

The easiest valuation method for most households is the IRS cents-per-mile rate:

• 2025 rate: 70 cents per mile
• The 10,000-mile threshold for this method applies to the vehicle's total annual mileage, not just the au pair's personal miles. A typical family car that gets driven 12,000–15,000 miles per year qualifies.
• The au pair just needs to track personal miles (a simple note each time they take the car for personal use).

If Au Pair Pays for Gas

The 70¢/mile rate is an all-in rate covering vehicle wear, insurance, and fuel.

• Au pair did NOT pay gas: The full 70¢/mile is the taxable fringe benefit value. Nothing to subtract.
• Au pair DID pay gas: Subtract the fuel component. The IRS pegs fuel at roughly 5.5¢/mile. So the taxable value drops to about 64.5¢/mile.

Example

If an au pair drives 1,500 personal miles in a year and the host family pays for gas, the taxable fringe benefit is 1,500 × $0.70 = $1,050 — adding about $105 in income tax at the 10% bracket.

Eliminating the Taxable Benefit

If the au pair reimburses the host family at the full IRS rate (70¢/mile, or 64.5¢ if they pay their own gas) for all personal miles, the reimbursement exactly offsets the benefit value, leaving zero taxable fringe benefit.

FICA on Car Use

Because most au pairs are nonresident aliens on J-1 visas and exempt from FICA, the personal car use value added to their income is also exempt from Social Security and Medicare taxes — but still subject to federal income tax.

Relationship to W-2

If a host family issues a W-2, taxable fringe benefits should be included in Box 1 (federal wages). In practice, most host families who issue a W-2 only report the cash stipend and ignore fringe benefits.

The au pair's obligation to report all taxable compensation on their 1040-NR exists regardless of whether a W-2 captures it. The W-2 (or lack thereof) does not change what is actually owed.

Practical Bottom Line

Many host families provide extras like gym, phone, and car access without tax reporting, and many au pairs do not include them on their return. But technically, extra cash and most in-kind perks beyond room, board, and the $500 education benefit are taxable income. Given the amounts involved, the tax impact is usually small — but it is worth knowing the rule.