Hi, I use my mother-in-law who is 72 & retired(only receiving a pension and social security) to watch my kid's(12 & 11) after school. I paid her roughly $7400.00 in 2008. How should I claim her on my 2008 taxes. Do I have to pay taxes on her or would it be better for her to. I would like to try and get the child care credit($600.00/kid) but is it worth it if I have to or she has to pay taxes. Please help, thanks