Actually--you can. They cannot claim the daycare on their own return because they cannot get childcare credit for a child not claimed as a dependent on their own tax return. Your in-laws gave you a gift---you can claim the childcare credit that was paid by that gift. Gifts are not taxable and do not have to be reported on your tax return.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
