My wife babysits for our grandson 4 days per week while my daughter works.
She babysits at my daughter's home for free, but we are reimbursed $12 per day for fuel to drive 52 miles per day.

My daughter would like to claim the child care tax credit.

Do we then have to claim this as income and pay social security and income tax? I think my wife would be an "independent contractor" and treated as if she were in business for herself. Can we then claim the mileage as an expense and zero out the income for tax purposes? I just don't want it to cost us more money or trigger an audit.