Parent is nanny, claimed for dependent care credit & a household employee. Does the “nanny tax” still apply? Or pay FICA because she is claimed for dependent care credit?

[TaxGuyBill]

Are you saying the parent of the child is watching the child?  Or is it the grandparent?

If it is the child's grandparent watching the child, are you (the parent) married?  Single?  Divorced?  Something else?

[tgore3rd]

Grandparent. I am the parent. Married.

[TaxGuyBill]

No, Social Security and Medicare taxes are not due.  You claiming the Dependent Care Credit does not change that.

Although it is not required to issue a W-2, it is generally easier for both the grandparent and for you claiming the dependent Care Credit if you do issue a W-2.  But if you have not file it yet, there could be late penalties if you do file one now.