Search Results for: volunteer

How can I thank my volunteers?

 

It’s the end of your homeschool organization’s school year and you want to thank your volunteers. They work so hard, so you hand out generous gift cards as thank you gifts. You may have just created a tax liability for your volunteers! Carol Topp, CPA, the Homeschool CPA discusses ways to thank your volunteers that are tax-free.

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Do you have more questions about volunteers and paying workers? I spent at lot of time doing research so that homeschool leaders will know if they are paying their volunteers, board members, and workers legally and correctly. It’s all in this new book:

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Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

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Can a homeschool group pay a volunteer?

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This is an excerpt from my update book, Paying Workers in a Homeschool Organization

“Can we pay our homeschool co-op director? She works so hard.”

Yes, your homeschool organization can pay someone who works for the organization, but the pay must be reported to the Internal Revenue Service (IRS). The reporting responsibility will be on both the homeschool organization and the worker. Additionally, the organization will have to determine of the worker is an employee or an independent contractor. Other chapters in this book explain the required reporting and worker classification.

Instead of paying a worker, your homeschool organization can show appreciation to a volunteer in a variety of ways, but they may have tax consequences such as:

  • Reduced fees or tuition. Reduced tuition for classes or for a homeschool co-op fee is a nontaxable fringe benefit if it is insignificant (more on that in the book). If the tuition reduction is significant the value of the tuition is taxable income to the volunteer.
  • Gift cards, but they could be taxable income to the recipient if the cards are a replacement for payment for services and not a true gift.
  • Non-cash gifts such as flowers, books, a coffee mug or chocolate are excellent ways to express appreciation and are tax-free to the volunteer.

I’ll discuss each of these types of compensation (reduced fees, gift cards and non-cash gifts) to a volunteer in detail … (you’ll need to buy the book to read the details!)

Carol Topp, CPA


payingworkerscoveroutlined

Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

BuyPaperbackButton

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Homeschool co-op has a super volunteer. Can she be paid?

SuperMom Cartoon

Hi Carol,

Our co-op is a nonprofit corporation. Almost all of our tutors in the co-op are moms with kids in the program. The moms do not get pay in money for teaching but are offered “credits” against tuition.

1) Are we correct to assume that we are not dealing with either Independent Contractors (IC) or employees in this circumstance?

2) We have one tutor who gets “credits” and payment. Can we regard her as an IC if she submit an invoice?

We do have a few tutors whom we pay and we will need to look more closely into invoices and 1099 MISC.

Thank you so much for your advice. If these questions are covered in your ebook, please let me know.

-MG

 

Dear MG,

Thank you for contacting me. Let’s see if I can answer your questions.

1. Sounds like your tutors are volunteers. You thank them with tuition discounts (or “credits” as you call them). The more a person volunteers, the larger the discount/credit. There is no problem with doing that, except the “credits” are really a form of compensation for her services and are taxable income to the recipient. Your”volunteers” won’t like hearing that news!

Paying a Volunteer

2. Paying a volunteer gets very tricky. She’s no longer a volunteer because she is paid. She’s actually a mix; some volunteer and some paid. That’s what’s confusing. If you can clearly separate her volunteering from her paid tasks, then do that. For example, if she tutors and gets credits (which are taxable compensation) and then in addition designs your website for free, it’s pretty easy to separate those two jobs.

Super volunteers

But some people are what I call “super volunteers.” They volunteer so much beyond their discounts or credits that the organization pays them for their extra volunteering. But volunteers cannot get paid, so she’s either an employee or an IC.I cannot determine her worker status with the information you gave me.

If you want to treat her like an independent contractor, then she cannot receive benefits like tuition credits. The value of these credits need to be reported to the IRS and added to her taxable income.
I discuss this in Money Management in a Homeschool Organization. See Chapter 12.

Cover Money Mgmt HS Org

The Money Management book will be helpful and so will my Paying Workers in a Homeschool Organization book, because it shows the forms needed for employees and Independent contrcators.

 

Carol Topp, CPA

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How to thank a volunteer

One of the blogs I read Nancy with Nonprofit Accounting Help, recently went to an IRS seminar for nonprofits.

The subject of giving thank you gifts to volunteers came up.

http://www.nfpaccountinghelp.org/volunteer-thank-yous-cash-gift-cards-or-non-cash-gifts/

Here’s an excerpt:

Volunteer Gifts vs. Compensation

Joe Kroll and Ryan Johansen of IRS explained that volunteers are people who perform work and receive no compensation for it, so when they are suddenly compensated, the organization runs the risk of giving them taxable income. Non-cash gifts – a turkey, a coffee cup – pose no problems, but gift certificates and cash are taxable income to the recipient. They noted that the FICA threshold is $100 a year, meaning if volunteers are compensated with, say, $250 gift certificates, they will owe FICA of 5.65% and the organization will owe 7.65% – and wouldn’t the organization want to pay both parts to avoid taking away from its gift?

So yes, you can say ‘thank you’ to your volunteers with cash, just provide them with a report the following January showing that they received taxable income. It’s probably a good idea to warn them that they will need to include the gift in their taxable income. I didn’t ask whether you’ll be issuing W-2 or a 1099 – consult your payroll service.

Keep Volunteer Appreciation Simple For Everyone

With the added layer of complexity that comes with cash or gift card thank you’s, it might be in every one’s best interest to just avoid cash and gift certificates. Nothing says “thank you” quite like making the volunteer’s tax return more difficult!

Alternatively, you can avoid the whole problem by choosing a different means of expressing appreciation, i.e. non-cash gifts. Here’s a site with some great ideas http://www.energizeinc.com/ideas/gift.html. How do you show your volunteers that you appreciate their time and effort?

Well, I don’t like the sound of THAT!! Taxable income for a gift card to appreciate a volunteer! Ugh!

But I thought I’d share this with you so you can consider how to thank your volunteers.

 

Carol Topp, CPA

What's a volunteer worth?

Volunteers are worth their weight in gold. Most homeschool organizations are run completely by volunteers who are doing a wonderful service to their community and other homeschooling families. What’s a volunteer worth? Priceless? Independent Sector, a coalition of nonprofits,  calculates the worth of an hour of volunteer time.


The estimate for the value of volunteer hour jumped by 74 cents, from $18.77 in 2006 to $19.5
1 last year, according to Independent Sector (IS), a Washington, D.C.-based coalition of nonprofits and foundationsgirl-peeks-around-money.

Washington, D.C. had the highest hourly value ($30.10) .  The top states were all found in the Northeast: New York ($26.18), Connecticut ($25.75), Massachusetts ($24.29) and New Jersey ($23.62).

In all, 10 states eclipsed the $20 value and all but seven had values of more than $15.

Source: http://www.independentsector.org/programs/research/volunteer_time.html

Could your homeschool group survive if you paid your volunteers these wages? Probably not…they are indeed quite valuable.

I  am frequently asked if a volunteer can be paid. If you pay a volunteer, she is no longer a volunteer anymore.She  is an employees and your homeschool organization will owe employer taxes such as Social Security, Medicare, Unemployment and Worker’s Comp.

I recommend homeschool groups show appreciation though thank you notes, gift certificates, verbal appreciation and praying for your volunteers.

Carol Topp, CPA

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

Rewarding volunteers in your homeschool organization

HomeschoolCPA has been getting quite a few questions via e-mail lately…here’s one I thought I’d share with you having to do with rewarding volunteers.

Carol,

Thank you for your web site. It is a great resource for homeschool groups.

I’m on the board of a home education association. We hold an annual conference of about 800 – 1000 and need many volunteers to help us with the event. What are some appropriate ways to thank the volunteers? Can we give them a gift (e.g. mug)? Can we give them free parking? Can we give them a dollar amount off admission for each shift they work? From one of the answers you gave in your FAQ, it appears it is OK to give discounted admission to the conference, but I just want to confirm that.

Can we give more to key volunteers (ones who are responsible for key areas of the conference and will not be able to attend sessions)? Can we give key volunteers a complete set of CDs from the conference, hotel rooms and meals while at the conference? Do we have to report this on the 990 also?

Thanks for your great help.
Dorothy K

Dorothy,
Thank you for your kind words about my website. You ask some excellent questions. As for the mugs, free parking and reduced admission: yes, yes and yes. All these are appropriate ways to thank your hard working volunteers.

As for the CD set, hotel and meals: yes, these are also appropriate ways to thank volunteers. If any of these volunteers are also board members, you should disclose these expenses paid by the organization on their behalf on Form 990 Part V-A Current Officers compensation. I’d include a note to the effect that the volunteer was given lodging and meals at the annual convention. This is not taxable income to the volunteer. Putting the information on the Form 990 is just a way of disclosing to the IRS and anyone reading your 990 that you pay expenses for volunteers. That is a completely legal, legitimate and generous thing to do!

I hope that helps! Best of success in your future efforts!

Carol L. Topp, CPA

Background checks for homeschool organizations

A homeschool leader on the Homeschool-Life Leaders Forum asked,

Could you share what companies you use to do background checks for your organization?

 

Here are some of the companies that homeschool groups use for doing background checks on employees and volunteers:

Protectmyministry.com

We have used ClearStar.net for several years. They charge $7.95 for a basic criminal background check. Our members can fill in their own information, so we don’t have to deal with paperwork and shredding personal information.

We use Federal Background Services. very reasonable and efficient

My co-op uses SecureSearchPro.com. They charge us about $14/check. They customized our background search to fit our specific needs. They bill us on a monthly basis. I really like them, they are easy to use, members fill out an online form so I never have to gather their personal information.

 

Many states now require background checks on any individuals working with children. You church host may require background checks as well. So the companies mentioned above may be very helpful to you in running your homeschool programs.

 

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

Need advice when hiring your first employee? Discount program available to nonprofits.

Hiring employees can seem like a taunting task. My book Paying Workers in a Homeschool Organization can help a lot, but if you want extra services, consider contacting a service like HR Solutions Partners.

The HR Solutions Partners discount program at TechSoup provides human resources support services to eligible nonprofit organizations, charities, and public libraries throughout the United States.

With minimal experience, you can use HR Solutions Partners services for support in training employees, administering payroll, measuring employee performance, and more.

I’ve not used them, so I cannot vouch for their services, but it can’t hurt to call and talk to them.

Carol Topp, CPA

Paying Workers in a Homeschool Organization covers paying workers as employees or independent contractors. There are also chapters on paying volunteers and board members. It includes sample forms, tips and advice to help you pay workers in accordance with the IRS laws to help your organization pay their workers correctly. Written specifically for homeschool organizations.

$9.95 paperback

$3.99 ebook

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Creative Ways to Run Your Homeschool Co-op Without Employees

So you really don’t want your homeschool co-op to hire teachers as employees, but how can you run your group without them? Carol Topp, the HomeschoolCPA , offers a few creative ways to run a homeschool co-op without hiring employees or dealing with payroll.

Listen to the podcast.

Paying Workers in a Homeschool Organization

Are you paying workers in your homeschool organization? Can a volunteer be paid? Should a worker be treated as an employee or independent contractor? Do you know the difference?

Homeschool leader and CPA, Carol Topp, has the answers to your questions in her book Paying Workers in a Homeschool Organization.

This 130 page book covers paying workers as employees or independent contractors. There are also chapters on paying volunteers and board members. It includes sample forms, tips and advice to help you pay workers in accordance with the IRS laws to help your organization pay their workers correctly. Written specifically for homeschool organizations.

Click Here to request more information!

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Scrips fundraisers for homeschool groups

Carol,
Our homeschool coop’s sports team decided to do a fundraiser using Scrips. The group is going to make each individual player buy their uniform instead of renting it from the team. So last August, the co-op started individual family accounts using money made from Scrips to be able to be applied toward buying individual uniforms.
According to some of the information I just read on your website (http://homeschoolcpa.com/do-not-use-individual-fund-raising-accounts/), I am concerned that this violates the rules for 501 c(7) non-profit social groups.
Am I understanding it correctly that allowing individual athletes to fund raise using Scrips to offset individual uniform cost is not allowed for 501 c(7) non-profits? Is this truly is an improper use of fundraising proceeds?
Thank you so much,
Elizabeth

Elizabeth,

You are correct that usually individual fundraising accounts are prohibited for 501c tax exempt organizations as I wrote about here and  here.

But Scrip is an exception to the “No individual fundraiser accounts” rule.

Great Lakes Scrip requested a private letter ruling from the IRS in 2009 stating that their program does not create income to the parent or inurement because they are rebates and not payment for services. BTW, these IRS private letter rulings cost thousands of dollars.

The IRS letter is 9 pages long and probably more than you care to read. Fortunately, Great Lakes Scrip provides a a nice, plain-English summary of the tax implications from using their scrip program.

“we want to reassure you that crediting your members’ scrip rebates toward their tuition or other fees has been reviewed and approved by the IRS, if you have structured your program correctly.” -Great Lakes Scrip
Take a little time to read the document from Great Lakes Scrip to be sure you are running your Scrips program correctly.

 

And one other word of warning come from Blue Avocado (a great source of information on running a nonprofit organization):
Regular scrip often results in a nonprofit handling a good deal more money than it ever has previously. For example, an all-volunteer group may be used to handling hundreds of dollars, but with scrip they may be handling tens of thousands of dollars in a short period of time. Doing so requires conscientious volunteers who have strong ability to manage funds carefully, promptly, and ethically.

Carol Topp, CPA

Helping homeschool leaders with legal and tax compliance

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