If you are claiming that you paid money to the relative then you have to provide the person's Social Security number or Tax ID to the IRS on your return when you claim the childcare credit, so yes, your relative then has to file a tax return and show the self-employment income earned from babysitting for you. But it sounds like no money changed hands.....
And...are you claiming this relative as a dependent on your tax return? You cannot use a dependent as the childcare provider that you enter 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.**
