I also have the same question but with additional nuances. My girlfriend and I have a baby and we are paying her mother monthly for helping us take care of the child (she also lives with us for this reason). I will be claiming the child tax credit for him since i will be itemizing my returns but i wont be taking the dependent care credit (since I dont want to pay social security or Medicare taxes hopefully). Will I be able to consider her as a family member (grandmother of my child) since shes my girlfriends mother, or will she be considered an independent contractor?
I am also wondering if I can put money into a flexible spending account with my employer to pay her with pretax. A family member being paid for childcare should qualify as a childcare related expense right? (Especially if she has to still file income taxes regardless of if I qualify for the nanny tax exemption or not).
