I live with my Fiance and we aggreed this past winter that I would quit my job and stay home to watch the children. In exchange for the loss of my freedom he paid me $6000 all at once (it was 500 a month which was what we figured the difference between my pay and child care was) I believe i have to file a schedule C, since it wasn't a gift, but I wanted to make sure. Also, I'm concerned that the fact it's such a round number might make me an audit target, and I've got to figure out how he reports the payment on his taxes. Any help with these issues would be greatly appreciated.

“ In exchange for the loss of my freedom he paid me $6000 all at once (it was 500 a month which was what we figured the difference between my pay and child care was) I believe i have to file a schedule C, since it wasn't a gift, but I wanted to make sure.”---->I guess you can treat the money , $6,000 as a gift ; you, as a recipient, do not need to file Sch C /Sch SE (you, as a gift recipient, are NOT subject to any tax on a gift up to $13,000).Your fiancée doesn’t have to file Form 709 as the amount $6,000 is less than the annual gift tax exclusion, $13,000,the amount that is annually exempted from federal gift tax purposes. If the children are your fiancée’s children, and he , as your ER, hires you a s a nanny, then he needs to issue yu a W2 to pay Social Security and Medicare taxes, FICA tax, if your annual pay crosses a set threshold, which was $1,700 for 2009, 2010 and 2011. But I do NOT think that you are employed as a nanny by your fiancée.
“Also, I'm concerned that the fact it's such a round number might make me an audit target, and I've got to figure out how he reports the payment on his taxes. “----> As described above, you (your fiancée) can treat it as a tax free gift.