Thank you for the clarification. You cannot mark anywhere on Form 2441 that your parents are providing the care. You can still pay them, report these costs as part of your Child & Dependent Care Expenses, and your parents will be required to report this income on their tax return as other income on Schedule 1. Since it sounds like you meet the requirement, you would not need to withhold Social Security or Medicare taxes like you would for a normal household employee, and as such, would not treat them as household employees when you complete your tax return. That is the essential difference.
If the IRS has any concerns, they will reach out with a letter requesting additional information. You can then provide the information needed to show that your parents are providing the care and meet the exception to not have taxes withheld as a household employee.
Please also see do I need to file IRS Schedule H.
@lixiang
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
