28 years in the business and 8 years of teaching the income tax return prep classes for a major income tax company gives my answer weight ... If you report the deduction on your return it MUST be reported on the Sch C on the child care provider's return ... that is why they instituted the form 2441 in the first place ... it was not to give the parent's a deduction so much as to get the parents to report the child care providers who were not reporting this income at all. Look at the form 2441 ... you must indicate who you paid, their address and SS# or EIN ... that is how the IRS cross references your deduction and their income ... if the income is not reported on the Sch C then an Audit letter will be issued.
NOW ... on a Sch C you can take deductions against the income that includes a Home Office deduction and in the end very little will be taxable normally ... so before you cry foul your mom should work the numbers so you can see it will not hurt too badly.
