Since the care is in your home you would likely be paid in cash or will receive form 1099-NEC. In either case you would report that income as being self employed and pay income tax as well as self employment tax on that income. You can deduct any expenses related to your business activity. You would also be able to claim earned income credit if otherwise eligible and contribute to a Roth IRA to a maximum of $7,000 assuming you are at least age 50.
You report that you are self-employed on schedule C. You report the gross income, and you can deduct legitimate expenses. For a home day care, this can include a percentage of your housing costs, you can start to research this here.
You pay income tax and self-employment tax on the net profit. Your compensation for IRA purposes is your net profit minus half the self-employment tax, so your compensation is about 92% of your net profit after expenses.
Note that if married, your spouse can also make an IRA contribution based on your compensation, even if your spouse does not have compensation in their own name. It is not necessary to make your spouse a co-owner or employee of the business.
However, note that if you fail to report your legitimate expenses in order to claim higher compensation and make a larger IRA contribution, that can be considered tax fraud if you are audited.
Lastly, also note that depending on your other sources and amounts of income, having taxable income from a home day care may increase the percentage of tax you pay on your social security benefits, if you receive benefits at this time.