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

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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Board members who won’t do anything

 

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I hear from a lot of homeschool leaders that they have board members who don’t do much. How frustrating.

Here’s some advice:

Do something. The problem is likely to get worse and a board member who is not participating can demoralize the entire board.

But stay hopeful. Many board members need a reminder to be more conscientious. You’re all in this together. Some inactive board members may need to be let go. They may be grateful that you’ve given them a graceful way to reduce their work load or even leave the board.

  • Check to be sure that expectations were made clear to the board member before he or she joined the board. “I know you joined the board recently and I’m not sure that you realize that we ask all board members to attend the annual dinner and, hopefully, to help sell tickets. Let me explain to you what most board members do, so you can see whether you’ll be able to work on this with us.”

Here’s a good list of Requirements of Board members.to get you started.

  • Hold a board discussion at which expectations are reconsidered and reaffirmed. Agree on a list of minimal expectations for every board member, and ask people to suggest how they might individually help as well.
  • Be sensitive to possible health issues or personal reasons why a good board member isn’t participating as much as he or she has in the past.

Remember, homeschool leaders carry a lot or responsibility. Your inactive member may be having health, marriage, or parenting problems that she is not sharing with you. Show grace and compassion and she may be so grateful for your support that she becomes active again.


Sorry, but the rest of this content is available only to my email subscribers! I know that’s a little bit sneaky, but I want my email subscribers to get special content like this list of steps to help an inactive board member.

Subscribe to my email list and get helpful tips for dealing with a board member who won’t do anything as well as special reports, discounts and and helpful resources that I don’t share on my blog or website.

 

 

 

My book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out also has helpful advice in picking board members, managing volunteers, and running a successful homeschool organization.

HS Co-ops Cover_400

 

Carol Topp, CPA

HomeschoolCPA.com

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Are Classical Conversations tutors employees or independent contractors?

Hi Carol,
I am a part of a Classical Conversations community with a Foundations/Essentials director. The Foundations/Essentials directors hire tutors to run the classrooms on community day.

I am concerned that the  tutors are being treated as employees even though they are paid as independent contractors. Can a Foundations director hire tutors as independent contractors and still be able to specify what time they start, what material to cover and for how long they are to cover it, require training in the summer and training every 6 weeks of class etc?

Would a contract help? It seems like the contract could call the tutor an independent contractor but the Director could still treat them like employees.

This is hugely concerning and our campus wants to operate in a legal way. We are considering hiring a lawyer to help us understand all this. Is the lawyer the way to go? Or would you be able to advise on how to handle this?

We want to be legal and try to sort out truth in this whole legal situation.

Thank you for your time,

Katherine

 

Katherine,

Thank you for contacting me. I have been talking to several Classical Conversation (CC) Directors and tutors about worker classification. It’s a confusing and complex topic!

Factors: control and key activity

The question of whether CC tutors are independent contractors (IC) or employees is not cut and dried, nor the same for every CC community. There are many factors to consider including some you mentioned such as training, specific time and place to work, the curriculum to use, etc.

Two factors to consider are: the amount of control and if the tutors are providing a key activity of the business. (By the way, these factors of control and providing a key activity apply to all types of homeschool groups, not just Classical Conversations.) Some homeschool organizations may control their tutors so much that they treat them like employees, while others may allow more freedom and could be properly classified as ICs. Some homeschool organizations may depend heavily on the tutors’ services as the key activity of the business, while other homeschool groups may not use tutors as the key activity because they rely on volunteer parents to teach their classes.

Would a contract help?

You asked, “Would a contract help? It seems like the contract could call the tutor an independent contractor but the Director could still treat them like employees.”

You’ve hit the nail on the heard. Having a contract is not assurance that a tutor is an independent contractor; how they are treated carries more weight in determining proper worker classification.

Worker Classification Determination

You asked, “Is the lawyer the way to go?  Or would you be able to advise on how to handle this?

I can make a fact-based worker classification determination. In this determination, I substantiate my opinion based on all the facts, not just the few you mentioned, and court cases involving worker classification.


Additionally, I also just updated  my book Paying Workers in a Homeschool Organization. It explains both the current criteria the IRS uses and the criteria they have used in the past to determine independent contractor or employee status.

 

 

 

 

You could, of course, convert all your tutors to employees, and sleep better at night! I can explain the steps you’ll need to take.  It will be more paperwork and more expense, but you won’t worry about an IRS investigation on worker status.

Carol Topp, CPA

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Top 10 blog posts of 2016

 

Here is a round up of the top 10 most important blog posts from HomeschoolCPA in 2016.

 

Many of them have to do with paying workers in a homeschool organization, probably because I was asked a lot of questions about paying volunteers, giving discounts in stead of paying teachers and the difference between employees and independent contractors.

I also spent a lot of time in 2016 researching and writing Paying Workers in a Homeschool Organization and my blog posts reflect what I was learning.

Compensation to homeschool board members is taxable income

Paying Workers in a Homeschool Organization updated book is ready!

Are homeschool co-op tuition discounts taxable income? Probably!

Can you discount a homeschool co-op class in lieu of paying the teacher?

How you pay your homeschool teachers could affect the property tax exemption for your host church

Can a homeschool group just get together without having to report to the IRS?

Adding religious purpose to bylaws and Articles

Use Quickbooks online for free

Are discounts to homeschool board members taxable compensation?

How the IRS defines a school

I wonder what 2017 will bring in the world of homeschool organizations!

Sign up for my email list to be kept up to date on the questions homeschool leaders are asking.

P.S. Subscribers to my email list get freebies, discounts and special reports I share only with them.

Carol Topp, CPA
HomeschoolCPA.com

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