In reply:
Regarding 2.a. ~ To check if your rent meets the requirements, see page 17 of the Publication link I sent. It is entitled Lodging on Your Business Premises and does discuss rent off of the business premises, as well. If it was determined that your rent did qualify, then the employer would need to issue you a corrected Form W-2.
About the W4: No, it is not. Step 3 is lowering the tax withheld by $2,000.
So, by selecting 1 in this section, you are signaling you have a dependent eligible for the $2,000 Child Tax Credit and Additional Child Tax Credit. Therefore, only $300 instead of $2,300 would be withdrawn throughout the year.
Keep in mind that penalties and interest are assessed if the tax due at year end is more than $1,000. Since this is not calculated until the tax return is filed by the following April, it is even longer that penalties and interest could be added.
You're welcome! We are happy to help.
@likeabird43
