My MIL has been watching our child twice a week, at her request, for no payment all year. Due to an over calculation of childcare costs on my part, my FSA (from which we are reimbursed for our daycare center costs) will have $120 left at the end of this year. I can't see any reason not to pay MIL with this FSA money for her services (she is eligible under the FSA rules), and I believe that, ordinarily, she wouldn't have to declare this small amount of income (she is retired and has no earned income). Am I missing anything?