Q. Do I have to provide 1099 or W2 forms to them?
A. No. You should pay by check, just in case you have to prove payment to the IRS or your FSA administrator.
"I am divorced".
It doesn't matter in your parent's case, since they were paid less than $2200. But, for others reading this, There is an exception to a grandparent being exempt form the nanny tax: you (the child's parent) "should count wages to your parent if both of the following apply:
(a) your child lives with you and is either under age 18 or has a physical or mental condition that requires the personal care of an adult for at least four continuous weeks in a calendar quarter
and
(b) you are divorced and have not remarried, or you are a widow or widower, or you are married to and living with a person whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in a calendar quarter."
