First, enter your W-2 as you normally would in TurboTax (Federal Taxes > Wages & Income > Wages & Salaries (W-2).
Next, the IRS considers you to have a business, even though you may look at it as just babysitting. They consider this to be "self-employment." You'll input that amount under Federal Taxes > Wages & Income > Business Items > Business Income & Expenses (Sch C). Follow the prompts; TurboTax will ask you if you received a Form 1099-MISC or Additional Income (i.e. Cash) -- select Additional Income and you'll be able to enter the $7700 and call it "cash." Then TurboTax will ask you if you have any expenses to claim for the babysitting. If you don't, then you're finished with income.
If you do want to claim expenses, then you'll have to upgrade to Self-Employed. The benefit of taking your expenses is that you're allowed to subtract them from the $7700, thus lowering the amount you pay taxes on. TurboTax will ask you to input the different expenses you may have, and then it will put both the income & expenses on a Schedule C, where it will do the subtraction and give you a total "net" figure on which you'll be taxed. Understand that you'll pay both income tax and self-employment tax on any self-employment income, whether it's the $7700 or a lesser "net" amount after deducting expenses.
That's how it works when you have a side business.
