I have a deduction from my paycheck for dependent care that comes out pre-tax. I have a neighbor and my cousin watch my kids while I work. I was told by the benefit provider to have my neighbor/cousin give me an invoice with the dates and amounts of the baby sitting. I can then submit this to the benefit provider for reimbursement to me. My question is, will my neighbor/cousin need to claim the amount I pay them as income? Will they receive a tax form (1099, etc) stating the amount I paid them? Thanks.
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