There are different ways to report depending on if the work was done in your home or in the home of the babysitter.
If the babysitting was done in the babysitter's home you should issue the 1099-MISC to the babysitter, be sure to use the Form 1096 Transmittal and mail to the IRS address for your area.
If you have a household employee, the babysitter worked in your home, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. You don't need to withhold federal income tax from your household employee's wages. The information below will guide you to find what applies to you. The convenience for the household employer is that all the taxes can be handled on the tax return. However, a W2 would have to be issued. TurboTax can help with that by using the Quick Employer Forms.
If you find that you are a household employer, and you didn't withhold the employee's portion of social security and medicare tax you could ask for those funds to be returned or make an arrangement for repayment if she continues to babysit for you.
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