Have a Tax Question? Ask a Tax Expert
In reality, each person is supposed to report all of their income regardless of amount. That would apply to your Mom and your mother in law.
Whether they actually report it or not, if you put their name, social security number, and amount paid on the Form 2441, the IRS has the information and has the ability to see whether or not they reported it.
So the question really becomes - is your mother in law going to report it as she should? If she is not, do you want to alert the IRS as to the fact that she received the income? If she is, then you definitely should take the benefit.
Any amount they make is "reportable income" - all or a portion of it may not be "taxable" depending on their specific circumstances.
If they were my clients, I would have them complete a tax return that showed the income and showed that they did not owe tax (assuming that is how it turned out). That way they are protected from an overzealous IRS inquiry should one occur.
She is eligible to receive up to 400 in self employment without reporting the income on her own tax return as long as her total income does not exceed her standard deduction and exemption allowance total.
If she babysits in their home and they withhold her portion of ss/medicare tax, she need not file a return(or pay income tax) until her income exceeds her standard deduction and exemption allowance total.
Since you mention she receives ss benefits, I assume she is a single person over 65. In that case, she can earn up to 6050 in wages, and other income before she would be required to file an income tax return.