We need to solve this problem without using trigonometry.
KLMN square is inside ABCD square. Prove that midpoints of the segments AK, BL, CM, and DN are vertices of a square. KLMN can be situated anywhere inside ABCD. I think that we are going to use congruent triangles.
I tried to draw so that the intersection point of diagonals of ABCD and KLMN coincide, I also tried the opposite to consider the general case, because KLMN can take an arbitrary position.
So, I would like to see approaches, how to prove.
COMMENT.-Let $S$ and $s$ be the sides of both squares.
$(1)$ Inside square $ABCD$ take a point $N$.
$(2)$ Draw the circle $\Gamma$ centered at $N$ having radius $s$.
$(3)$ Take a point $K$ in $\Gamma$.
$(4)$ The line $NM$ perpendicular to side $NK$, cuts $\Gamma$ in $M$.
$(5)$ The two lines, parallel to $NM$ and $NK$ passing by $K$ and $M$ respectively interset at point $L$ which clearly is the fourth vertex of the small square $KLMN$.
$(6)$ What remains to finish is taking the midpoints of segments $AK,BL,CM$ and $DN$ and verify that them are the vertices of an square which is easy and straightforward.