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Per this excerpt from Publication 926, Household Employee's Tax Guide, since your child is under the age of 18 and you are divorced and not remarried, you should treat as wages and pay payroll taxes on the monies paid to your parents for the care of your child who is under the age of 18 if the annual amount is over $2,800:

Thus, you should issue them a W-2 form to report the wages and file schedule H with your personal tax return.