You didn't ask, but I'll tell you anyway: You do not have to claim the day care money as income. You can treat it as an expense sharing arrangement between family members. But, if you sister wants to claim the day care credit, you will have to claim the income. In addition to income tax, you will have to pay social security and medicare tax, unless the total amount she paid you was less than $2000. Then, you would just have to pay income tax.
