Where is the babysitting taking place----in your own home or in your sister's home? If it is in your own home, your sister might be a household employee, depending on how much she is being paid. If she is a household employee, then you will need to issue a W-2 to her.
https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/considered-household-employee/L...
https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-payments/pay-taxes-pay-household-emp...
If it is in her home, then she has self-employment income. You do not issue a 1099NEC to her. It is simply up to her to report that income on her own tax return; you need her SSN or Tax ID in order to enter the childcare credit on your own return. The amount of income she enters on her tax return needs to match the amount you enter on your return for the credit.
And....you asked --"What about mom or dad?" Again---where is the babysitting taking place----your own home or in the grandparent's home?
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
