Hello,
I am in a similar situation with DCFSA during COVID.
We are using our mother to babysit our kids since March and would like to pay her $5000
She is retired, citizen, receives SS income and not our dependent.
I was just going to give her the $5000 as cash for the year without any W-2 and submit the claim.
I am govt employee so use FSAFEDS and they have a general claim form (attached if anyone is interested)
https://www.fsafeds.com/public/pdf/FSAFEDS-DCFSA-Claim-Form.pdf?h=nxhjspkwdttc5a3nf69a8uss1nk7zi79kx...
My understanding is that tax rules are more relaxed when paying a grandparent. You don't have to file all the employment forms. You just pay her, and she claims it as miscellaneous income.
I will have her fill out Schedule C when she files her federal taxes.
Would she have any special obligations for state taxes? We are all in CA.
thanks
