You don't have to pay a grandparent who looks after your kids, and plenty of families don't. When the care is regular, though, paying something, or agreeing clearly that it's a gift, tends to keep things easier for everyone. If you do pay, the tax side is simpler than most parents fear. In the US, wages paid to your own parent usually aren't subject to nanny tax, and in Canada they can count toward the child care deduction with a proper receipt.
This is general information, not tax advice. Rules have exceptions, and income tax and benefits depend on each person's situation, so check with a tax professional before you rely on any of it.
How common is grandparent childcare?
Very. In an AARP survey of more than 3,300 US grandparents, published in June 2026, 69% said they provide care for their grandchildren, averaging more than 500 hours a year. AARP put the value of that unpaid care at an estimated $731 billion (AARP).
Most of that care is unpaid. So the question isn't whether grandparents help. It's whether the help you're getting has quietly turned into a job.
Should you pay?
A few questions usually settle it:
- Is it regular? Three afternoons a week for a school year is a different thing from the odd Saturday. The more it looks like childcare you'd otherwise pay for, the more it's worth talking about money.
- What does it cost them? Gas, lunches, a car seat, time they'd otherwise spend working or with friends. Some grandparents are retired and happy to; some are giving up hours of paid work.
- Have they said anything? Many won't ask. "We'd like to pay you, what would feel right?" gives them room to say yes or no.
- What would you do if they stopped? If the answer is "pay a sitter $18 an hour," that's a useful reference point for both of you.
How much should you pay grandma?
There's no standard rate. Families tend to land somewhere between a token gift and the going rate for a sitter. For a benchmark, the US Bureau of Labor Statistics puts the median pay for childcare workers at $16.82 an hour, or $34,980 a year, as of May 2025 (BLS). Local babysitting rates vary a lot by city, and we go through them in how much to pay a babysitter.
Common arrangements:
- A weekly amount, the same every week, so nobody has to count hours.
- Costs covered: gas, groceries, an annual pass to the zoo they take the kids to.
- Something other than cash: a paid trip, their phone bill, help with something they need.
- Below market, said out loud: "We can't pay what a sitter would cost, but we'd like to give you this."
The tax side in the US
Nanny tax. When you pay a household employee $3,000 or more in cash wages in 2026, Social Security and Medicare taxes normally apply (IRS Publication 926). Wages you pay to your own parent are an exception: they don't count, unless both of these are true:
- your parent cares for your child who is under 18 (or needs adult care because of a condition), and
- you're divorced and not remarried, widowed, or living with a spouse whose condition stops them caring for your child for at least four weeks in a row in that quarter.
Wages paid to your parent are never subject to federal unemployment tax (FUTA). And if grandma looks after the kids in her own home rather than yours, the IRS says she generally isn't your employee at all.
The exception is written for your parent. The publication doesn't list in-laws among the exceptions, so if it's your partner's mother doing the care, check with a tax professional before assuming the same rule applies.
The child and dependent care credit. You can count work-related payments to relatives who aren't your dependents, even if they live with you (IRS Publication 503). So pay to a grandparent you don't claim as a dependent can count. For 2025 returns, the expenses that count are capped at $3,000 for one child and $6,000 for two or more; the credit is a percentage of that, depending on your income.
A dependent care FSA. If your employer offers one, the 2026 limit rose from $5,000 to $7,500 a year ($3,750 if married filing separately) (IRS Publication 15-B). The same eligibility rules apply as for the credit, so payments to a grandparent who isn't your dependent can generally qualify. Open enrollment for next year is usually in the fall, so now is the time to plan it.
Grandma's side. What you pay her may be taxable income for her, and in some situations it could affect benefits. That's a question for her and a tax professional, not something to guess at.
The tax side in Canada
You can claim child care expenses on line 21400 for care by an individual, including a grandparent, as long as the person isn't one of the payees the rules exclude. Those are the child's mother or father, a supporting person of the child, someone you or a supporting person claimed certain tax credits for, or anyone under 18 who's related to you (CRA Income Tax Folio S1-F3-C1). The folio doesn't name grandparents either way, so if the grandparent lives with you or helps support the child, check whether they count as a "supporting person".
The annual limits are $8,000 per child under 7, $5,000 per child aged 7 to 16, and $11,000 for a child who qualifies for the disability tax credit. When an individual provides the care, the receipt must show their social insurance number (CRA). In practice, grandma has to be comfortable giving her SIN and signing receipts, and the payments may be income she reports.
US and Canada at a glance
| United States | Canada | |
|---|---|---|
| Payroll tax on paying your parent | Usually none; exceptions for some single, widowed or divorced parents | Talk to a tax professional |
| Tax break for you | Child and dependent care credit; dependent care FSA | Child care expense deduction (line 21400) |
| Paperwork | Records of what you paid and to whom; her tax ID for the credit | Receipts showing her SIN |
| Annual limits | Credit: $3,000 / $6,000 of expenses (2025 returns). FSA: $7,500 (2026) | $8,000 under 7; $5,000 aged 7–16; $11,000 with the disability tax credit |
Put it in writing, even within the family
It feels formal. It also stops the most common arguments before they start. A one-page note covers it:
- The days and hours, and what happens on school holidays and PD days.
- The pay or the gift, and when it's given.
- What happens when someone's sick: the kids, or grandma.
- Who covers what: gas, snacks, outings.
- The house rules that matter to you: screens, sugar, naps, car seats.
- How either of you can change it, without anyone feeling guilty.
- When you'll look at it again: the end of the school year is a natural point.
If grandma also does pickups, the school needs to know she's allowed to collect your children. Our pickup authorization letter and the post on grandparents doing the school run cover that.
What if she won't take any money?
Many grandparents won't, and it's usually sincere. A few ways to say thank you that don't feel like a transaction:
- Cover the costs quietly: fill her tank, pay for the outings.
- Give her real days off, planned and protected, not just "whenever you need".
- Say thank you in a way she'll hear: a card from the kids, a photo book at the end of the year.
- Keep the arrangement fair: notice when she's tired, and don't let three afternoons drift into five.
Keeping it fair on both sides
The arrangements that last are the ones where grandma knows exactly which days are hers, and gets to say no without it becoming a family discussion. In Kid Pickup, that's how it works:
- Every pickup has one name on it. Grandma sees the days she's down for, and taps I'll do it or Can't make it when you ask about a new one. A "no" is a clear no, not an awkward phone call.
- Her days are on a calendar you both see, alongside the other parent's and the sitter's, so nobody wonders who has Thursday.
- The family gets a notification when she's picked the kids up, and the pickup shows when she arrived and when it was done, which also gives you an honest record of the days she covered.
- Grandparents don't pay. They're invited into your family, and one subscription covers everyone.
It's free to try for 14 days on iPhone. However you settle the money, a clear calendar does a lot to keep the arrangement feeling like help rather than an obligation.
FAQ
Do I have to pay taxes if I pay my mother to babysit?
In the US, wages you pay your own parent usually aren't subject to Social Security, Medicare or federal unemployment tax. The exception is if you're divorced and not remarried, widowed, or your spouse can't care for the child because of a condition, and your child is under 18. Your mother may owe income tax on what you pay her, so check with a tax professional.
Can I claim the child care credit for paying a grandparent?
In the US, generally yes, if the grandparent isn't your dependent and the care lets you work or look for work. You'll need records of what you paid and the grandparent's taxpayer ID. In Canada, payments to a grandparent can usually count toward the child care expense deduction, with receipts showing their social insurance number, unless they count as a supporting person of the child.
How much should I pay grandma to babysit?
There's no standard rate. Many families pay a set weekly amount below the going babysitting rate, cover costs like gas and outings, or give something other than cash. For reference, the US median pay for childcare workers was $16.82 an hour in May 2025.
Can I use my dependent care FSA to pay my parents?
Generally yes, if your parent isn't your dependent and the care is so you can work. The 2026 limit is $7,500 a year ($3,750 if married filing separately). Your plan may ask for the provider's taxpayer ID.
Is it OK not to pay grandparents for childcare?
Yes. Most grandparent care is unpaid, and many grandparents prefer it that way. What matters is that the arrangement feels fair to both of you, that it's clear which days are theirs, and that they can say no without guilt.