@GeorgeDenseff wrote:
If you are going to claim the money you pay her for the child and dependent care credit, then you need to issue her a W-2. If you pay more than $2,300 per year, then you have to pay her share of social security and medicare taxes. Your mother's name and SS number will be on the 2441 so those wages need to be accounted for.
That is not correct. As Bsch4477 said, it depends if the child care took place in the child's home (household employee which is a W-2 employee unless a parent) or in the sitters home which is self-employed income.
The W-2 is only required if employment tax is paid and you do not pay employment tax when the sitter is a grandparent.
See IRS Pub 926 for W-2 requirements and parent exception.
https://www.irs.gov/pub/irs-pdf/p926.pdf
Taking the childcare deduction is not dependent on issuing any form to the sitter. However, the sitters name, address and SSN (or EIN) must be entered on the tax return to claim the credit so the IRS can check that the sitter called the income if you deduct it.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
