@Pixibelle9 wrote:
What if I don't claim the dependent care credit? What does grandma need to do when it is tax time? We have paid her monthly.
If you pay a person in your home, most of the time they are your household employee and you must give them a W-2 and pay the household employee's tax (social security and medicare). If they work in their home, then most of the time they are self-employed and are expected to file a self-employment tax return.
Taxes are mostly run on the honor system. The IRS expects people to follow the rules, but they also know stuff happens under the table, and less than 1% of tax returns get audited. If neither you nor the other person makes waves, the odds are you won't get caught. But that's not legal advice.
