US Tax Form 1040EZ: Do I enter ALL income or ONLY income specified in W-2 forms?
Yes, you need to include income from your freelance work on your tax return.  In the eyes of the IRS, this is self-employment income from your sole-proprietorship business. The reason you don't see it mentioned in the 1040EZ instructions is that you can't use the 1040EZ form if you have self-employment income.  You'll need to use the full 1040 form.  Your business income and expenses will be reported on a Schedule C or Schedule C-EZ, and the result will end up on Line 12 of the 1040.  Take a look at the requirements at the top of the C-EZ form; you probably meet them and can use it instead of the more complicated C form. If you have any deductible business expenses related to your freelance business, this would be done on Schedule C or C-EZ. If your freelance income was more than $400, you'll also need to pay self-employment tax.  To do this, you file Schedule SE, and the tax from that schedule lands on form 1040 Line 57.
I assume the OP is the US and that he is, like most people, a cash-basis tax payer and not an accrual basis tax payer. Suppose the value of the rental of the unit the OP is occupying  was reported  as income on the OP's 2010 and 2011 W-2 forms but the corresponding income  tax was not withheld.  If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion,  then there is no tax or penalty due for 2010 and 2011. Nor is the company entitled to withhold tax on this income for 2010 and 2011 at this time; the tax on that income has already been paid by the OP directly to the IRS and the company has nothing to do with the matter anymore. Suppose the value of the rental of the unit the OP is occupying  was NOT reported as income on the OP's 2010 and 2011 W-2 forms.  If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion,  then there is no tax or penalty due for 2010 and 2011. Should the OP have declared the value of the rental of the unit as additional income from his employer that was not reported on the W-2 form, and paid taxes  on that money? Possibly, but it would be reasonable to argue that the OP did nothing wrong other than not checking his W-2 form carefully: he simply assumed the income numbers included the value of the rental and copied whatever the company-issued W-2 form said onto his 1040 form. At least as  of now, there is no reason for the IRS to question his 2010 and 2011 returns because the numbers reported to the IRS on Copy A of the W-2 forms match the numbers reported by the OP on his tax returns.    My guess is that the company discovered that it had not actually declared the value of the rental payments on the OP's W-2 forms for 2010 and 2011 and now wants to include this amount as income on subsequent W-2 forms. Now, reporting a lump-sum benefit of $38K (but no actual cash)  would have caused a huge amount of income tax to need to be withheld, and the OP's next couple of paychecks might well have had zero take-home pay as all the money was going towards this tax withholding. Instead, the company is saying that it will report the $38K as income in 78 equal installments (weekly paychecks over 18 months?)  and withhold $150 as the tax due on each installment. If it does not already do so, it will likely also include the value of the current rent as a benefit and withhold tax on that too. So the OP's take-home pay will reduce by $150 (at least) and maybe more if the current rental payments also start appearing on the paychecks and tax is withheld from them too. I will not express an opinion on the legality of the company withholding an additional $150 as tax from the OP's paycheck, but will suggest that the solution proposed by the company (have the money appear as taxable benefits over a 78-week period, have tax withheld, and declare the income on your  2012, 2013 and 2014 returns) is far more beneficial to the OP than the company declaring to the IRS that it made a  mistake on the 2010 and 2011 W-2's issued to the OP, and that the actual income paid was higher. Not only will the OP have to file amended returns for 2010 and 2011 but the company will need to amend its tax returns too. In summary, the OP needs to know that He will have to pay taxes on the value of the waived rental payments   for 2010 and 2011. The company's mistake in not declaring this as income to the OP   for 2010 and 2011 does not absolve him of the responsibility   for paying the taxes What the company is proposing is a very reasonable solution to the   problem of recovering from the mistake. The alternative, as @mhoran_psprep points out, is to amend   your 2010 and 2011 federal and state tax returns to declare the   value of the rental during those years as additional income,   and pay taxes (and possibly penalties) on the additional   amount due. This takes the company completely out of the picture,   but does require a lot more work and a lot more cash now rather   than in the future. It also depends on where you work. If you move your home and your job then the date you establish residency in the new state is the key date. All income before that date is considered income for state 1, and all income on or after that date is income for state 2.  If there is a big  difference in income you will want to clearly establish residency because it impacts your wallet. If they had the same rates moving wouldn't impact your wallet, but it would impact each state. So make sure when going from high tax state to low tax state that you register your vehicles, register to vote, get a new drivers license... It becomes more complex if you move your home but not your job. In that case where you work might be the deciding factor. Same states have agreed that where you live is the deciding factor; in other cases it is not. For Virginia, Maryland, and DC you pay based on where you live if the two states involved are DC, MD, VA. But if you Live in Delaware and work in Virginia Virginia wants a cut of your income tax.  So before you move you need to research reciprocity for the two states. From Massachusetts information for Nonresident and Part-Year Resident Income, Exemptions, Deductions and Credits Massachusetts gross income includes items of income derived from   sources within Massachusetts. This includes income: a few questions later: Massachusetts residents and part-year residents are allowed a credit   for taxes due to any other jurisdiction. The credit is available only   on income reported and taxed on a Massachusetts return. Nonresidents   may not claim the taxes paid to other jurisdiction credit on their   Massachusetts Form 1-NR/PY. The credit is allowed for income taxes paid to: The credit is not allowed for: taxes paid to the U.S. government or a   foreign country other than Canada; city or local tax; and interest and   penalty paid to another jurisdiction. The computation is based on comparing the Massachusetts income tax on   income reported to the other jurisdiction to the actual tax paid to   the other jurisdiction; the credit is limited to the smaller of these   two numbers. The other jurisdiction credit is a line item on the tax form but you   must calculate it on the worksheet in the instruction booklet and also   enter the credit information on the Schedule OJC. So if you move your house to New Hampshire, but continue to work in Massachusetts you will owe income tax to Massachusetts  for that income even after you move and establish residency in New Hampshire. "Form W-9 (officially, the ""Request for Taxpayer Identification Number and Certification"") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). A W-9 is typically required when an individual is doing work, as a contractor or as an employee, for a company and will be paid more than $600 in a tax-year.  The company is required to file a W-2 or a 1099 and so requests a W-9 to get the information necessary for those forms. I cannot say if it is incompetence on the part of the accounting department or a deliberate ploy to make the refund process more onerous, but do not comply.  Politely nsist on a refund without any further information.  If the company refuses, request a charge-back from the credit-card company, file a complaint with the consumer-protection department of the state where the company is located, and write a bad review on Yelp or wherever else seems appropriate." You said your mother-in-law lives with you. Does she pay rent, or are you splitting the cost of housing? That would also have to figured into the equation.  If you had a business you would now have to declare the expense on your business taxes. This would also then be income for her, which she would have to account for on her taxes. Remember there are both state and federal taxes involved. Regarding expenses like diapers. If the MIL had the business she could deduct them as a business expense. If you have the business it would greatly complicate the taxes. Your business would be essentially covering your personal expenses. If your MIL was not a business the cost of diapers would be paid by you regardless of the working situation of you and your spouse. To claim the tax credit: You must report the name, address, and taxpayer identification number   (either the social security number, or the employer identification   number) of the care provider on your return. If the care provider is a   tax-exempt organization, you need only report the name and address on   your return. You can use Form W-10 (PDF), Dependent Care Provider's   Identification and Certification, to request this information from the   care provider. If you do not provide information regarding the care   provider, you may still be eligible for the credit if you can show   that you exercised due diligence in attempting to provide the required   information. The IRS will be looking for an income tax form from your MIL that claims the income.  Getting too cute with the babysitting situation, by starting a business just for the purpose of saving money on taxes could invite an audit. Also it is not as if you just claim 3000 and you are good to go. You can only claim a percentage of the expenses based on the household AGI, the more the make the more you have to have in expenses to get the full 3000 credit, which mil cause more taxes for your MIL. Plus the whole issue with having to pay social security and other taxes on a household employee. It might be best to skip the risk of the audit. Claiming your MIL as a dependent might just be easier. If your dad would have won money on the slot machines(And the amount was high), the casino would have given him a W2G to fill out right there and taxes would have been deducted. However, table games including Poker does not have any such rule. You will have to account for your winnings(And losses) at the end of the year. So, it is ok if you sign that paper, as you do not owe the IRS any money yet.  You will still need to file your taxes as a non resident alien at the end of the year and attach the form W2G with it and pay your dues. "Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to ""gross up"" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . .  The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33.  The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle.  The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The ""gross-up"" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table.  If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld." I received the same error message and was able to resolve the issue by checking line 7 of my 1040 form( where the total income from wages,tips,etc as stated on the W-2) and deleting the quantity I had placed in either of the gray boxes. If you wrote the sum of your income on the doted lines in either of the gray areas of line 7 (or other such areas on other lines) then this error might result. The grey areas as I understand it, are reserved for certain descriptors which are defined in the 1040 instructions included with the free file fillable form 1040. Residents pay tax on all of the income they receive during the calendar year from all sources, so you'll at least need to file and pay New York state income taxes on this money regardless. I can't answer whether you'll need to file and pay Colorado state income tax on this money as well. Generally speaking, you need to file a return for each state in which you live, receive income, or have business interests. If you are required to file a Colorado state income tax return, however, you can claim a credit for taxes paid to another state on your New York state income tax return using form IT-112-R (see the form and instructions).