If we paid a friend or relative for childcare, can we claim it as a gift for tax purposes?

[Daboa]

If we paid a friend or relative for childcare, can we legally choose to consider it a gift? This older thread seems to indicate that this would be okay if both parties agree to consider childcare and payment to be independent events. I understand that we then wouldn't be able to claim dependent care credit on our taxes. 

Bonus question 1: Does it complicate things if there are electronic records describing payments as being "for childcare"?

Bonus question 2: Ignoring bonus question 1, could we do both in a year? Could some transactions be considered payments (just enough to use FSA funds) and other transactions be considered gifts?

Thanks.

[Carl]

A gift you give is not deductible on any tax return. If the gift to any one person is more than $16,000 in 2021, then the giver is required to file a completely separate IRS Form 709 Gift Tax Return. If the amount of your gift is less than 11.5M then no taxes are assessed. But you are required to report it to the IRS if it's more than $16,000 in any one tax year. ($15K if 2020 or earlier).

Additionally, the recipient of the gift is not required to report it on their tax return either.

[Daboa]

I understand that the gift is not deductible and that there is a $16k limit. My question is whether it is okay for us to consider our transactions "gifts" for tax purposes--the payer would not get to claim dependent care credit and the payee would not need to pay self income tax. Does that work?

[Carl]

You can consider it a gift, so long as the recipient is aware they can't claim any type of credits or expenses against it, they may have incurred while providing child care. This would only be a problem if the provider of that child care was "in the business" of providing child care.