If your parents babysit for your children in their home, then there is no need for you to issue a W-2, nor are you required to withhold Medicare or Social Security taxes. However, the income is taxable to them if it is $400 or more. They would report the income as Other Income on Schedule 1, Line 8, of their tax return.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
