Beware if you are paid too much money from one source, even for "babysitting." If your customer claims child care and dependent tax credits, they may be required to report you to the IRS.<quoted text>
That may very well be; however, a person would have to be a damn fool to report cash income; seriously, the Mitt Romney's of the world are squirreling away millions and you're worried if a babysitter reports income of $20? Nonsense.
On the other end, if you pay a provider to care for your dependent or spouse in your home, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare taxes and pay federal unemployment tax.