I pay my babysitter “under the table” and I want to file for the dependent care credit. Does this mean my babysitter needs to report what I pay her as income?

[chelsg808]

What happens if she doesn’t? And if she does, what are the taxes she’ll have to pay?

[Bsch4477]

Ideally she would give you her social security number for you to claim it.  What she does about reporting that income is up to her and doesn’t affect what you do. 

[xmasbaby0]

If you enter the childcare credit you have to provide the Social Security number or Tax ID of the babysitter.   The babysitter is responsible for reporting that income on her own tax return.   The IRS matches that information up.

Babysitter will pay self-employment tax  forSocial Security and Medicare on the income as well as ordinary income tax depending on how much she earned.   

You have not mentioned  where the babysitting occurs.  If the sitter comes to your home and you have paid over $2300 in 2021 you were supposed to treat her like a household employee and withhold SS and Medicare.  If she babysits in her own home or somewhere else, she is just self-employed.

https://ttlc.intuit.com/community/tax-topics/help/who-is-considered-a-household-employee/00/26770

https://ttlc.intuit.com/community/tax-payments/help/do-i-have-to-pay-taxes-on-what-i-pay-to-my-house...

[Opus 17]

It's not under the table anymore if you do that.  You must give your care provider's name, address and social security number, and the IRS will look for matching income on their tax return.  It's pretty much the total opposite of under the table.  This is a discussion you should have had with the provider before you started, they would probably have charged you more if they knew they were going to be paying taxes.  

[xmasbaby0]

And...just to add.....you should have had a clear understanding with the babysitter from the get-go about this instead of springing it on her if she was unaware of the tax law regarding self-employment income.