I will be paying my mother $700 a month for childcare in her home, does she need to report this income and is it subject to tax? She would not exceed 40 hours a week.

[SweetieJean]

We still don't know if OP plans to take the Child Care Credit. If not, then I say it's a gift.

[TaxGuyBill]

A Gift is a no-strings-attached payment.  The OP said she is paying "for childcare".  In other words, the grandmother would be willing to do this for free AND the mother would be giving this money to the grandmother even if the grandmother was not watching the child.  This is not a Gift.

[Critter]

I agree that technically Bill is correct ... however ... if the daughter doesn't turn the mother in by claiming the Child Care Credit then how is the IRS to ever know.  And now that we have educated her she now knows that she is giving her mom a gift &/or reimbursing her for the costs (diapers, food, transportation,  entertainment, etc) for the  child.  Treating it as a gift/ cost covering arrangement between family members is common and impossible for the IRS to patrol even if they had a mind to do so.

[TaxGuyBill]

I will never encourage something that is not correct just because the IRS wouldn't know about it.

[sanchez86]

What attaches the payment to childcare?

I happen to pay a ton of my parents' bills (car, insurance, cable, electricity, etc) because they don't make much $. They also happen to occassionally babysit my child because they are his grandparents.

What if OP paid his parents' bills (rent, phone, car, etc), and separately, the grandparent takes care of the baby because they're the grandparent and grandparents want to spent time with their grandchild.

(Obviously OP wouldn't be able to claim the Child Tax Credit, but least it wouldn't be reportable income to the grandparent, right?).

[xmasbaby0]

@Yplunket 

Your post is blank. Do you have a question?