From what you said, you only have #1 to the answer.
I don't think you can report #2. Your mam can’t be a baby sitter because she didn’t do that job. It is cheating. Plus IRS would be very easy to catch this.
When you pay case to your baby sitter, you already saved 7.65% SST expense. Be sure to claim childcare in- house expense, you have to pay SST for that person.