Can a teacher work off their tuition to a homeschool co-op?

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We have recently started an inclusive homeschool co-op. I have three of your ebooks and I’m a bit confused on a few issues.

1. Each family pays the outside teachers directly. We do a registration process, but the cash or checks go to the teacher, not the co-op. Do we mark that money “in the books” or is that outside of co-op money?

2. I am also confused with the differences between volunteer parents teaching a class for reduced fees for classes and  an Independent Contractor working off their tuition.

What am I missing?

Thank you so much for your time,
Heather

Heather,
Thank you for contacting me. To answer your questions:
1. Since the funds never come to your group, they are not recorded in your books as income to your group.

2. Volunteer vs Independent Contractor (IC). It’s a world of difference because an IC is not supposed to receive any fringe benefits such as free or reduced tuition. If you give an IC fringe benefits, then they are an employee and you need to set up payroll, pay unemployment taxes, workers comp, SS/Medicare taxes, etc…The IRS is very clear and very strict about ICs not receiving benefits.
Employees can receive tax-free tuition discounts. Colleges and private schools do that a lot for their employees.

On the other hand, a volunteer can receive reduced or free tuition, because she is volunteering and not paid.

This explanation may help:
(this is from an article “Money, Taxes and Your Homeschool Family” in the March/April edition of The Old Schoolhouse magazine. Read the full article here: http://ow.ly/uAkhI

Teresa, a homeschool mom who teaches at a co-op where her own children take classes, was told by her co-op that they would just deduct her co-op tuition from her income as a teacher. Teresa’s co-op paid her as an independent contractor and this arrangement didn’t seem correct to her.

Fortunately, she emailed me, asking, “Can I work off my co-op fees by teaching a class?”

The answer is no, you cannot.

The homeschool co-op should pay Teresa with a paycheck. Then, as a separate transaction, Teresa should pay her fees to the co-op. It is important to separate the two transactions because of taxes. Being paid for teaching is earning taxable income. Paying tuition is a personal expense and not tax deductible. The two do not negate each other for tax purposes.

It may seem like more work for the co-op’s treasurer to pay and collect money from the same person, but the separation is important for clarity and correct reporting of taxable income to Teresa.

I hope that helps explain the difference.

 

Carol Topp, CPA

Pros and cons of leading a homeschool co-op video

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At the Indiana Association of Home Educators 2014 conference, I spoke to homeschool leaders about

Tips and Traps for Homeschool Leaders

In this video I discuss the pros and cons of leading a homeschool co-op and your responsibility as its leader.

In the video I mentioned a handout. You can download it here: http://wp.me/aF6pa-1c4

I hope the video is helpful.
For other videos for homeschool leaders visit HomeschoolCPA.com/Videos

 

Carol Topp, CPA

HomeschoolCPA.com

Could you please give me a minute (and review my books)?

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Have you benefited from reading any of my books?

Did Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out make starting co-op a little easier?

Did the information in The IRS and Your Homeschool Organization get your organization tax exempt status?

Have you read through the list of practices to avoid embezzlement in Money Management in a Homeschool Organization? (yes, unfortunately, homeschool groups can be a victim of theft)

Could you please leave a short blurb on Amazon? It doesn’t have to be long. Just a sentence saying something like:

Really helpful!

Clear and easy to understand.

Essential for running a homeschool organization.

Here’s the links to make it easy for you.

Homeschool Co-ops book the original edition had 16 reviews, but this new edition has only 5 reviews :(. It needs a boost.

IRS and Your Homeschool Organization book (This book has zero reviews! I really need your help here!)

Money Management in a Homeschool Organization book (This book has zero reviews, too! It really needs some!)

I appreciate your time and effort!

Thank you!

Carol Topp

Podcasts for homeschool leaders

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I started my podcast, the Dollars and Sense Show about a year ago! It’s hard to believe its a year old already!

I have a few podcasts that are for homeschool leaders:

Starting a nonprofit homeschool group correctly

Starting a homeschool group correctly.

What is tax exempt status and how do I get it for my homeschool group?

Paying workers in a homeschool organization Part 1

Paying workers in a homeschool organization Part 2

 Advice from experienced homeschool parents

 

 

I plan more for the next few months including

  •  Easy fund raisers for homeschool groups
  • Do you know about required IRS filings for homeschool organizations?
  • Has your group lost its tax exempt status?

 

What your you like to hear about? Drop a note in the comments and I may use your idea for a future podcast.

 

If you find any of my podcasts helpful, please leave a review on iTunes. (click on “View in iTunes” to leave a review)

How to leave a review on iTunes

 

Thank you!

Carol Topp

Starting a nonprofit homeschool group correctly. Dollars and Sense Show # 5 – See more at: http://ultimateradioshow.com/show-hosts/dollars-sense/#sthash.OArruFN6.dpuf
Starting a nonprofit homeschool group correctly. Dollars and Sense Show # 5 – See more at: http://ultimateradioshow.com/show-hosts/dollars-sense/#sthash.OArruFN6.dpuf

Celebrate my podcast birthday and enter to win an iPad mini!

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My podcast, the Dollars and Sense Show is a year old! Hard to believe that a year ago I started recording podcasts twice a month on a topic important to everyone: money!

The Dollars and Sense show is part of a larger network of podcasts by homeschoolers, for homeschoolers called the Ultimate Homeschool Radio Network.

For exactly one year, the Ultimate Homeschool Radio Network has been blessing homeschool families with fun, informative, and encouraging radio broadcasts every single week. All of our shows can be 1) played through the internet 2) downloaded to your computer or 3) subscribed to in iTunes as a podcast. Have you taken the time to listen to a show and find out what the Ultimate Homeschool Radio Network is all about?

As a newsletter subscriber for the Ultimate Homeschool Radio Network, you can get free audios sent to you every single week through email which makes it super easy to try listening. All of our shows are free!

As we celebrate our one year anniversary, several of the show hosts are joining together to offer a spectacular Anniversary Giveaway – you can win an iPad Mini!

Happy Birthday Ultimate Homeschool Radio Network! Win an iPad MINI from us!

iPad Mini Celebration Giveaway

A entire year of totally free podcasts that talk about every aspect of homeschooling, from planning, curriculum, money, marriage and more! We have an exciting line-up of shows and it is amazing to see the growth, especially over the last month! This is a thank you for all of you who are current listeners or those of you finding us for the first time – we began our network with a handful of show hosts and plan on growing! Each show host was carefully selected
and these shows are amazing!

Here is a snap shot of our current shows:UltimateHomeschoolRadioNetworkShowHosts_2014

And here is your chance to win an iPad Mini!

Rafflecopter GIVEAWAY

I hope one of you wins the iPad mini! If you do, let me know!

Carol Topp, CPA

HomeschoolCPA.com

 

Experienced Homeschoolers Offer Advice (podcast)

Carol Topp recently interviewed experienced homeschoolers at the HSLDA National Homeschool Leaders Conference. Listen to Carol’s lastest podcast as the leaders discussed:

  • Why they became a homeschool leader
  • What they wish they had known
  • What advice they have to offer you

Listen to the podcast

(I apologize for some of the poor audio! I’m improving, but I’m still learning about recording with lively background noise)

 

If you find this podcast helpful, please share it (below!) and leave a review on iTunes. (click on “View in iTunes” to leave a review)

How to leave a review on iTunes

Thank you!

Carol Topp, CPA

Tax Exempt Status for Homeschool Co-ops (video)

I presented as workshop called “Homeschool Co-ops Are Like Marriage: Know What You’re Getting Into” at the Midwest Homeschool Convention in Cincinnati this year.

This is Part 7 of 7 is titled “Tax Exempt Status for Homeschool Co-ops.”

I explain:

  • What tax exempt is and how to get it for your homeschool co-op!
  • Required IRS reports that every homeschool organization needs to file.
  • What to do if your group has not filed the required IRS forms.
  • Homeschool co-ops being under a church.

 

 

In the video I mentioned my books
Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out.
The IRS and Your Homeschool Organization
Money Management in a Homeschool Organization

Here’s a handout for the presentation.

More clips from this presentation can be found at HomeschoolCPA’s YouTube Channel.

 

Carol Topp, CPA

Will getting an EIN put us on the IRS radar?

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Usually the first contact a homeschool organization has with the IRS is getting an Employer Identification Number (EIN). Most banks now request an EIN when a group opens a checking account. One group in Virginia is doing things right by getting a checking account for their homeschool co-op instead of using a personal account, but they wonder if this will mean more contact with the IRS.

Hi Carol,
I am new to an existing homeschool co-op in VA. This co-op is more then 12-15 years old, we do not accept donations or need to, so far we have been handling the money through someone’s personal bank account, we receive fees from students and then pay teachers and reimburse them for materials, generally we break even each year (or can if we need to).

The bottom line is that we want to be able to have a business checking account.

Can we get an EIN in order to open a checking account in our co-op name without incorporating and without having a state or federal annual filing requirement? I seem to remember that once you get an EIN (that I think is required for a business bank account), you are on the radar screen with the IRS and will need to file some sort of return.
Thanks so much,
Nancy in VA

Nancy,

Yes, you need an EIN for banking purposes. It used to be that getting an EIN was the first and last time a small homeschool organizations had to deal with the IRS. But not anymore!

Since 2007, the IRS has required tax exempt organizations (like your homeschool co-op) to file an annual information return, Form 990/990EZ or 990N. Fortunately, for small organizations (under $50,000 annual gross revenues), the Form 990N, is a short online form that asks only 6 questions. Read more here: Form 990N FAQ

If you are paying teachers, then you have some reporting to the IRS and your state government. You will have to pay payroll tax (Social Security and Medicare) and file a W-2 if they are employees or file a 1099MISC if they are independent contractors. You should read this blog entry: Paying co-op teachers is a sticky issue

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Need help understanding tax exempt status or money management in your homeschool group?

Carol Topp’s books are written specifically for the homeschool leader.

 

Carol Topp, CPA

Nonprofit status for homeschool co-ops (video)

At the Midwest Homeschool Convention I presented as workshop called “Homeschool Co-ops Are Like Marriage: Know What You’re Getting Into”

This is Part 6 of 7 is titled “Nonprofit Status for Homeschool Co-ops.

I explain what it takes to be considered a nonprofit and that nonprofit status does not mean tax free (or tax exempt as the IRS calls it)!

In the video I mentioned my books
Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out.
The IRS and Your Homeschool Organization
Money Management in a Homeschool Organization

Here’s a handout for the presentation.

More clips from this presentation can be found at HomeschoolCPA’s YouTube Channel.

 

Carol Topp, CPA

Win an iPad mini! Dollars and Sense Show podcast is a year old!

I launched a  podcast Dollars and Sense Show  a year ago this month!

The podcast is part of a podcast network, The Ultimate Homeschool Radio Network, where you can find podcasts for homeschoolers by homeschoolers.

The The Ultimate Homeschool Radio Network turns a year old this month and you can win a birthday gift-an iPad mini!

WiniPadUHRN

 

Enter here:

http://ultimateradioshow.com/giveaways/

You can also win a $25 gift card and other prizes. The celebration goes all the month of October.

Listen to my podcast Dollars and Sense Show. There are several episodes on starting or running a homeschool organization and I plan to have more shows to help homeschool leaders in the future.

If you like it, please leave a review on iTunes. Thanks!

 

Carol Topp