Depending on your state and county laws/policies, it may not be necessary to be licensed.
In my county, the following criteria might exempt a child care program from state licensing:
~Family day care programs which provide care for the children of only one family.
~Informal child care arrangements, such as co-ops, shares, exchanges and playgroups, in which no money is exchanged for the care and supervision provided.

I am not too certain as to the percentage...if your sister took the child tax credit last year, she can see what the difference would be and then pay you accordingly. I would have to agree w/you in not wanting to get a tax id at this time....

Let's see, when I was paying daycare for twins in 2006, we were only allowed to write off $700.00, a small portion of what we paid for ten months. I don't know what the going rate for childcare is in your area, but maybe you can charge your sister 25% less. After school care at our elementary school now runs $120/week!! ( From 3 p.m. (sometimes 2 p.m.) to 6. Additional monies are owed if it is an inservice day or holiday.

I wish you all the best.

Have fun with the kiddos