Carnival of Homeschooling/Dealing with Conflict

This week’s Carnival of Homeschooling: The Adventure Edition has a wide array of posts to educate, inspire, challenge, and entertain you!  http://www.tiffanyblitz.com/blog/archives/651

My post on Resolve Conflict: Take a PAUSE is included.

Happy blog reading!

Carol

W-2s and tax filings for homeschool co-op teachers

A homeschool co-op treasurer asks about the tax filings for paid teachers:

Hi,
I am the treasurer for a new co-op we have setup this summer, and will be starting our class days in the beginning of September. I am looking to get some advice from you on how we need to define our mentors (teachers), and if we need to give them W-2’s, and if we need to with-hold taxes, etc.

We will have about 12 mentors, each teaching a class of 8-9 kids on Fridays. We follow a curriculum that the parents buy on their own. We try to keep the cost very low, so the mentors, which are all mom’s of kids in the program get paid $800 for the year.

We have already been setup as a South Dakota non-profit corporation, and would like to work towards a 501c3 in the future, but not this year. Our main issue right now is we need to move forward with setting up a checking account, which requires an EIN, and to get that we need to know if we have employees. Also, I want to determine how I need to be paying them, as far as tax with-holdings, etc.

Thank you,
Doug M, SD

Doug,
Congratulations on your new co-op. It sounds as if you are off to an great start! You should be very proud of all that you have accomplished.

As you described the co-op’s relationship with the paid mentors, they should all be classified as employees. Your co-op exercises quite a bit of control by telling them what curriculum to use, so they are not independent contractors.

IRS Publication 15 Employers Tax Guide has a nice checklist of forms and dates that you’ll need to file:

You should collect a Form W-4 from each employee for their information and federal tax withholding To make your job simpler you can tell your employees that the co-op will not withhold federal or state income tax since their wages are relatively small. The W-4 is kept by you and not mailed into the IRS.

The co-op will be responsible for paying federal employer taxes (Social Security and Medicare) and filing quarterly statements with the IRS (called a Form 941). See IRS Publication 15

If you were 501c3, your co-op would be exempt from Federal Unemployment tax. But the tax is rather small at 0.8% (See Form 940 and its Instructions)

At the end of the year you will issue a W-2 to each employee and mail copies of the W-2 and W-3 to the Social Security Administration. See Pub 15 (above) for details. I go to an office supply store in January for the forms and usually a software program is included.

South Dakota may have unemployment tax requirements and workers compensation payments. Contact your state’s department of taxation or employment for details. I’m no expert on SD taxes, but here is a place to start: SD New Hire Reporting

Try not to be overwhelmed by all this. A lot of it is start up paperwork. You may want to see if there is a local CPA who can help you or at least check over the forms the first time you complete them. You could also consider using software such as Quickbooks and their Payroll feature (an additional add-on).

Carol Topp, CPA

Paying teachers in a homeschool co-op is a sticky situation!

In a yahoo group for homeschool leaders Amy posed a familiar problem: paying teachers at a homeschool co-op

For the past several years, our group has spent more (thousands more) than we have charged our members. We’re not technically “in the red” because of more prosperous years in the past. The reason   we are spending so much money is that over 90% of our income goes to paying our parent-teachers ($15-$20/hour)! The rest of the money goes toward classroom supplies. I am sure that most parents are unaware of how the finances of this group are managed.

Have you heard of groups paying their teacher/parents? What do I need to understand about the various homeschool support and cooperative group structures that I don’t currently comprehend?  Help!
-Amy

Amy,

Your situation sounds very familiar to me. I too was treasurer of my 40 family co-op and found that 75% of our budget was going to pay 4 paid teachers. The other 20 teachers were volunteer parents, myself included. Not all the families were using a paid teacher, but all were chipping in to pay for them. We also were finding that people were offering to teach because they thought they could get paid. We were losing our cooperative spirit. I knew something needed to change.

About the same time I was helping another homeschool group with some independent contractor/employee issues with the IRS. I wrote about it on my blog. You can read about it here (Is your homeschool group’s hired teacher really an employee?) and here (Update on Independent Contractors). We decided to follow IRS guidelines and have the parents pay the teachers directly, like you would pay a piano teacher. The co-op was no longer paying the teachers.

I did some number crunching and found that we could lower our co-op fee from $150/family/semester to $75/family/semester. In addition we offered a $50 discount for teaching a class. What happened was amazing! Wonderful, talented homeschooling mothers volunteered to teach a class! We had more volunteers than we could accommodate. REALLY! If a mother volunteers to teach a class she only pays $25/semester for her family to attend 3 hours of classes at our co-op. If her child attends one of our paid classes (there are only 3, guitar, art and Spanish) then she pays the teacher directly. For example, I pay $65/semester for my daughter to take an art class. I think the teacher is worth it. You can visit my co-op’s website at www.masoncoop.org for details.

This got us out of the sticky employee/IC situation with the IRS. I’m writing fewer checks. It made my job as treasurer a lot easier and no 1099MISC forms at the end of the year. No one complained. The spirit of cooperation has returned. YEAH!  I’ll also add that we let the volunteers decide what they wish to teach. If we cannot find a Spanish volunteer, no Spanish class is offered. If enough parents want Spanish we may see if a teacher can come to the co-op. We give her a room and she collects her fees from the parents directly.

I wrote a chapter in my ebook Money Management for Homeschool Groups on employee/IC status. You can find it all on my website www.HomeschoolCPA.com Look under ‘Resources’. The issue of paying teachers as employees is too important to ignore. Your group may have to consider some big changes.

Good Luck!!

Carol Topp, CPA

Resolve Conflict: Take a PAUSE

Conflict-it happens in any group of people and homeschool groups are no exception! Maybe it’s worse in a homeschool group because homeschool parents are typically independent-minded, confident people.  Its a wonder we get along with each other at all!

Peacemaker Ministries has a suggestion to dealing with conflict, remember to PAUSE.

• Prepare (pray, get the facts, seek godly counsel, develop options)
• Affirm relationships (show genuine concern and respect for others)
• Understand interests (identify others’ concerns, desires, needs, limitations, or fears)
• Search for creative solutions (prayerful brainstorming)
• Evaluate options objectively and reasonably (evaluate, don’t argue)

We had an example of this at our homeschool co-op recently.  There was a disagreement between our nursery coordinator and one of the mother’s about how to clean the toys in the nursery. Both ladies showed genuine respect for the other’s concerns (Affirm).  They agreed that safety of the children was important to both (Understand). Where they differed was that the nursery coordinator wanted to use only natural products, while the mother, a physician, was concerned that the natural products wouldn’t kill the germs and wanted to use stronger chemicals.  These ladies did research, gathered facts and shared them (Search).  They looked for creative solutions.  They chose to focus on the problem-cleaning the toys without endangering the babies-and they avoided the temptation to lash out personally or gain control (Evaluate options, don’t argue). They did bring our co-op director into the situation, so that she would know what was happening (Prepare).

Our co-op director told the board that several options were being considered and that the two ladies were working together on a solution.  She raved at how mature and respectful they were to each other. Unfortunately, we did have a problem with other people in the co-op. Some people not involved in the discussion were inflaming the issue by interfering where no interference was needed.  Sometimes we need to remember to PAUSE and to mind our own business.

Carol Topp, CPA

“Digital image content © 1997-2007 Hemera Technologies Inc., a wholly owned subsidiary of Jupiter Images Corporation. All Rights Reserved”.

Update on the IRS and Booster Club Fundraising

I mentioned in a previous post that three booster clubs in KY were being fined by the IRS for their fund raising practices. The issue was that the booster club was giving parents credit for their fund raising efforts.

The IRS and Fundraising

The booster clubs have appealed to their congressmen for help.  But it appears the IRS is digging in its heels on this issue. From the Lexington Herald-Leader:

Lois G. Lerner, Director of Exempt Organizations for the IRS, explained in a letter to the booster clubs that any booster club that raises money to benefit an individual student rather than a group is in violation of federal law and stands to lose its tax-exempt status. Lerner said the practice was against federal law.

“The requirement that each parent/member of the club must participate in the fund-raising activities in direct proportion to the benefits they expect to receive toward their children’s expenses directly benefits specific individuals and the parents instead of the class of children as a whole,” she wrote.

Do a Google search on “KY Booster Club IRS” to read more on the story (copyright prohibits a direct link)

So my advice is as before: If your organization is sharing, dividing or distributing fund raising proceeds to individuals or families, stop the practice and leave all fund raising proceeds in the general fund to benefit the group at large.

I’ll keep watching this issue. If the congressmen have any success with the IRS, I’ll let you know via this blog and my monthly newsletter (subscribe in the upper right hand corner of this page)

Carol Topp, CPA

Finding a co-op

I’m a homeschooling mom of 5 who lives in Brooklyn, NY. I’m looking to find a co-op where I can have my kids learn maybe 2 days out of the week. Any ideas on how I can find one?

thanks!

Diana,
I recommend that you go to my website www.HomeschoolCo-ops.com and click on the local co-ops link.  There I list two websites that have lists of co-ops by state and city.

A to Z Home’s Cool
Go to your state page and put “co-op” in the browser search

Local Homeschool.com
Search by “Type” for “Co-op” or “Cooperative.” You can further
narrow the search by including your state and/or county.

It may take a bit of hunting, but if you contact a few local groups, they can steer you in the right direction.

I hope that helps,

Carol Topp

P.S.  to homeschool webmasters: If your website lists local co-ops, drop me an e-mail and I’ll link to your site on my Homeschool Co-ops website

A happy co-op member

Homeschool co-ops can be a great addition to your homeschool efforts.  But too much of even a good thing can become overwhelming.

Joanie over at Missouri Homeschool Daily Log blog has some excellent advice about benefiting from the advantages that homeschool co-ops offer without over doing it.

In the beginning I was all for homeschool co-ops and still am now.  Over the years I have gathered experience about what works and what doesn’t in a co-op and for my schedule.  As far as your schedule is concerned I would caution you to not jump in with both feet and offer to teach more than one class. As a matter of fact I would suggest that you attend the first year/semester to get a feel for it before volunteering.  I can not stress this enough especially if you are a new home schooling parent.  Remember you’ll be preparing all your children’s material and then the material for your co-op class once a week or so.  The first year of home schooling is like riding a bike with training wheels.   One class can dominate your home school week placing a lot of strain on you.

Teaching others is a wonderful gift for all involved if the class is well behaved. I enjoyed teaching the classes tremendously and in the process discovered that I have natural born teaching tendencies.  In a group of people, however, discipline is always an issue.  When you look for a co-op make sure that they have good policies in place.  A co-op with good policies will run smoothly and be a joy to all.  What are some good policies?  Policies that I would look for in a co-op would be a clear statement of what their goal is as a group, fair discipline issues established for students and teachers alike, a statement of faith if you are looking for one to be in agreement with your faith, and attendance requirements.  Even loose establishments that just meet for play time need to have some simple policies to prevent hurt feelings and misunderstandings.

If you are homeschooling for religious reasons one of the biggest assumptions that I made was that everyone was homeschooling for the same reasons.  Do not assume that everyone feels the same way as you. Be a careful guardian, fully ascertaining the atmosphere of your co-op.  Attending a few times before deciding to join may be wise and most co-ops will have no problem with you doing so.

Co-op groups can certainly be a blessing to all involved, yet we need to remember that as home schoolers we are not without faults.  This article is intended to be wise advice and not at all a discouragement from finding a co-op.  When I started I wasn’t ready for issues that cropped up and it side-lined me for a while.  Now that the dust has cleared I know what to expect and also more of what I’m looking for when it comes to a homeschool co-op.

Such excellent advice! I thought I heard myself talking as I read Joanie’s post because everything she said I heard over and over again from co-op members as I wrote my book, Homeschool Co-ops: How to Start them, Run Them and Not Burn Out.

If enough experienced people repeat the same advice, we can prevent a lot of frustration and burn out.

Here’s to happy co-ops!

Carol Topp

---