Paying Volunteers Q&A with Homeschool Leaders

 

Can you pay a volunteer?

This short podcast episode (15minutes) from Carol Topp, the HomeschoolCPA, is the last excerpt from the Homeschool Leaders Retreat held in Indiana.

Carol Topp discusses how to pay (or thank) a volunteer and paying teachers in a homeschool co-op without causing tax problems for your volunteers (or your church host).

 

I mentioned my book

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.

 

Carol Topp, CPA

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Is there a difference between a 501c3 and an association?

Carol,
Is there a difference between a 501c3 and an association?
T.W.

T.W.,
501(c)(3) is a tax exempt status granted by the IRS to qualified nonprofit organizations (most of them are nonprofit corporations) whose purposes include charity, religious, and educational (and a few other purposes).

The word “association” does not have a specific legal definition. Associations are a gathering of people for a cause. Associations are typically nonprofit organizations. They can be unincorporated or be formed as nonprofit corporations.

Some associations may qualify for 501(c)(3) tax exempt status, some may not. For example I am a member of the Ohio Society of CPAs. It is a business association for CPAs in Ohio. It has tax exempt status as a 501(c)(6) business league, but not 501(c)(3) status.

If you’re confused by the words, nonprofit, association, 501(c)(3), this short video may help clear things up:

 

I hope that helps,

Carol Topp, CPA

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Tax Exempt Q&A with Homeschool Leaders

 

Have questions about tax exempt status for your homeschool group?

This short podcast episode (16 minutes) from Carol Topp, the HomeschoolCPA,  is an excerpt from the Indiana Homeschool Leaders Retreat. Carol Topp discusses tax exempt status and answers questions from homeschool leaders about self-declaring tax exempt status for your homeschool support group.

 

 

In the podcast I mentioned my book

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

 

Carol Topp, CPA

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Can our homeschool group get sued if we’re not a recognized nonprofit?

Carol,
We are a Christian homeschool group and co-op. The church that hosts our co-op classes is concerned with the possibility of us getting sued if we are not a recognized non-profit.  We are comprised of like-minded believers for a specific cause.  Can you comment on this?

TW

 

TW,

I usually recommend nonprofit incorporation to protect the leaders and members of a homeschool organization.

Nothing can stop a lawsuit, but forming as a corporation means the liability is limited to the corporation’s assets and it protects the personal assets of the leaders and members from the lawsuit damages.

Unfortunately, being like-minded does not mean you’re immune from lawsuits. One group told me that a co-op member’s health insurance sued the homeschool group for medical bills when a child was injured while at co-op. The co-op member did not bring the lawsuit, her health insurance company did.

If you need more information on the benefits of nonprofit incorporation for your homeschool group, read The IRS and Your Homeschool Organization. It includes a chapter on nonprofit incorporation.

I hope that helps,

Carol Topp, CPA

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Churches and Homeschool Groups

 

Some homeschool groups find it difficult to find a church host. Why is that?

This short podcast episode (16 minutes) from Carol Topp, the HomeschoolCPA, is an excerpt from a homeschool leaders retreat held in Indiana.

Carol discusses the tenuous relationship homeschool groups have with churches who host their programs. How to keep your church happy with your group and how to keep your church out of trouble with the tax man!

 

 

In the podcast I mentioned a Facebbook group for homeschool leaders called I am a Homechool Group Leader. Fantastic group! Ask to join today.

 

Carol Topp, CPA

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Do we need a new EIN for our new nonprofit corporation?

Our homeschool group already has an EIN (Employer Identification Number), but we recently decided to work toward 501c3 status. We are now incorporated.
Do we need a new EIN or can we just change the name on the one we have?

-Kellie

The IRS, who issues EINs, makes it clear that you need a new EIN when you form a new nonprofit corporation.

You will be required to obtain a new EIN if any of the following statements are true.

  • A corporation receives a new charter from the secretary of state.

Source:

You can get a new EIN online, but it’s helpful to look over the Form SS-4 so you know what questions will be asked.

Carol Topp, CPA

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Changes in Homeschooling

 

Are you seeing changes in homeschooling? How will changes affect your homeschool groups and its activities?

This episode is an excerpt from a homeschool leaders retreat held in Indiana. Carol Topp discusses the changes she sees in homeschooling. The lines between homeschool groups and small micro schools is blurring.

And more people are homeschooling but for different reasons than in the past.

How will your group face these changes?

 

This short podcast episode (15 minutes) from Carol Topp, the HomeschoolCPA, will

In the podcast I mentioned that I offer phone consultations with homeschool leaders. We can set up a phone call to discuss your questions. This is my most popular service for homeschool leaders. It’s like having your own homeschool expert CPA on the phone!

Click Here to request more information!

 

Carol Topp, CPA

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Does your homeschool group have fundraisers? You may need to register in your state

Carol,

We’re a 501(c)(3) tax exempt organization (Thanks for helping us with that!). In your letter to us you say that if we “solicit contributions” we may need to register in our state. We don’t ask for donations, but we do have several fundraisers each year. Are our fundraisers considered “solicited contributions”?

Jennifer in Georgia

Jennifer,

Congratulations on your 501(c)(3) tax exempt status from the IRS. Now it’s time to determine what your state requires from your organization.

Charitable solicitation registration

My source for information on nonprofit fundraisers is Nolo’s Nonprofit Fundraising Registration: The 50 State Guide

The Guide explains that 39 states (and the District of Columbia) require registration from nonprofit organizations that solicit donations in their state. (This is all nonprofits, not just those with 501(c)(3) tax exempt status.)

Definition of charitable solicitation

“Solicit contributions is defined broadly…Charitable solicitations don’t always have to involve asking for a donation. Offering to sell a product or service that includes a representation that all or part of the money received will be devoted to a charitable organization or charitable purpose is considered a charitable solicitation and triggers the registration requirement.”

So, fundraisers are included in the definition of charitable solicitations. That means if your homeschool group holds a fundraiser, you probably need to register in  your state. But keep reading…

Exemptions

The good news is that all states offer exemptions to their charitable registration for certain types of nonprofits. One common exemption is for small nonprofits:

“Most states exempt very small nonprofits from registering. In most states “small” is defined by a nonprofit’s gross revenues, not the number of members it has. In many states (about 16) a nonprofit qualifies for this exemption if it has annual gross revenues of less than $25,000.”

Nolo’s webpage with more exceptions to charitable registration

I researched the exemption rules in Georgia (it was included in the Form 1023-EZ Application for 501(c)(3) tax exempt status service that I provided to Jennifer’s organization ). I learned that Georgia offers an exemption from charitable registration  for nonprofits whose total revenue from contributions has been less than $25,000.00 for both the immediately preceding and current calendar years. Jennifer’s organization is under that $25,000 threshold in contributions and fundraisers, so she was happy to hear that her homeschool group did not need to register in Georgia. 🙂

Help for your homeschool organization

Determining whether your nonprofit is exempt from charity registration can be difficult. Exemptions vary from state to state. To determine whether your nonprofit is exempt in your state, you could look up the charitable solicitation laws of that state. The law is usually found on the Attorney General or Secretary of State’s website.

Or contact me, Carol Topp. I can do the research for you since I know what I am looking for!. This service includes drafting a letter for your board and future boards explaining the all required forms in your state with due dates. Cost: $50.

 

Carol Topp, CPA

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Why Do Volunteers Quit?

 

Why do volunteers quit or leave your homeschool organization?Do you know?

I was thrilled to meet Beth Mora of www.HereToHelpLearning.com  at a homeschool convention. That’s me on the left and Beth on the right with Melanie Young of Making Biblical Family Life Practical podcast in the middle.

In this short podcast episode (11 minutes) I interview Beth who offers tips on understanding reasons why volunteers leave your homeschool group.

 

Beth’s entire workshop on Recruiting and Retaining Volunteers is available at https://www.alliancerecordings.com/?context=&cid=61.

The notes from Beth’s workshop on motivating volunteers is available at http://HereToHelpLearning.com/Notes

 

Carol Topp, CPA

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Used curriculum sales and taxes

When a homeschool group has a fund raiser like a used curriculum sale or mini-exhibit hall is the income taxable?
Thanks,
Dorothy
Dorothy,
Fundraisers are usually considered unrelated business income, meaning that the fundraiser activities are not related to your organization’s tax exempt purpose. In other words, a homeschool group’s purpose is education, not selling curriculum or hosting an exhibit hall.

 

Unrelated business income is taxable income. It’s called UBIT-unrelated business income tax.

 

From the IRS: Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption. An exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T (and pay federal income tax).

 

Fortunately, the IRS has several exceptions to paying the UBIT tax:

  • A $1,000 threshold allows that the first $1,000 in gross revenues from an unrelated business will not be taxed.
  • If the fundraiser (or unrelated business) is run by volunteer efforts (i.e., no paid staff) then the proceeds are not taxed.
  • If the fundraiser is not regularly carried on, such as a once-a-year unsed curriculum sale, then the proceeds are not subject to UBIT.
  • If you are selling donated items, like in a garage sale, the income raised is not taxed.

One of these exceptions are bound to apply to most homeschool organizations.

So, while the income from an unrelated business activity may be taxable, in reality, no tax will be paid because one of the exceptions mentioned above applies.

 

Carol Topp, CPA

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