Emilie takes advantage of the day care services that her company provides to their employees. The value of the day care is $7,000 per year, of which Emilie pays $3,000. Emilie files as head of household on her tax return. How much of the benefit is a taxable fringe benefit to Emilie and will be reported as income on her Form W-2?

$0

$3,000

$4,000

$7,000