Legal Question in Tax Law in Massachusetts

If it is not payment for services but a gift it is tax free. Certainly reimbursement of expenses such as gas for running errands is not income. If you are not charging her and it is truly a gift there is no tax ramification. She can gift up to $13,000 annually to a single individual without incurring any gift tax implications.

If she is paying you $200 per week for services, she is also responsible for paying social security for you as a household employee. The money to the extent it exceeds your non-reimbursed related expenses such as gas for your car, is income and taxable.

I would assume you are doing this for her as a grandchild, and to the extent the $200 exceeds what it costs you to take care of her, it sounds like a gift. You have said you are not doing this for the money and she is giving it to you, you did not bargain for it or ask to be paid. She did not hire you or is paying you as an employee. Without knowing more I cannot make a real determination if you are being paid for services it is taxable income, if it is a real gift there are no tax implications.

However, I think I have given you enough information to determine what to do based on the real facts.