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Yes, your daughter should be reporting what she pays for preschool to claim the Child and Dependent Care Credit.  

What your daughter pays you (her parent) does not count as social security and Medicare wages unless, both of the following conditions apply:

1. The child is under the age of 18, or has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
2. Your Daughter's marital status is one of the following:
   1. She's divorced and has not remarried.
   2. She's a widow
   3. She's living with a spouse whose physical or mental condition prevents them from caring for child for at least 4 continuous weeks in the calendar quarter services were performed.

If both of the above conditions apply, then you are a household employee and your daughter may need to pay and withhold social security and Medicare taxes, pay FUTA or both.  Or, if you don't otherwise qualify as a household employee and are self-employed, then you are subject to the self-employment tax.

If a household employee is paid less than $2,600 in cash wages in 2023, ($2,400 in 2022) none of the wages you paid to the employee are social security or Medicare wages and neither the employer nor the employee will owe social security or Medicare tax on those wages.

For additional information, see IRS Publication 926 Household Employer's Tax Guide