How does the new tax law changes affect homeschool teachers and tutors?

There were a lot of changes to the US taxes in 2018 and the IRS re-designed the Form 1040, so tax preparation in 2019 will be very confusing.

Here are some highlights of the tax law changes that affect homeschool business owners and that includes (nonemployee) teachers at a homeschool co-op, owners of for-profit homeschool programs, and tutors.

Yes, teacher and tutors are business owners! If you accept payment and offer a service (like a class), you are in business and are a business owner. If you teach or tutor as an Independent Contractor, you have a tutoring business!

 

Highlights of Tax Changes in 2018

  •  No more exemptions for each family member. This may hurt large families.
  •  Standard deduction increased to $12,000 S/$24,000 MFJ
  •  Child Tax credit increased to $2,000/child
  •  New Qualified Business Income deduction
  •  New tax forms: 1040 “postcard”
  •  Lower tax rates (12% for most of us)

 

The new Qualified Business Income deduction will help homeschool business owners. You’re going to love it!

The deduction is equal to 20% of your profit from a “qualified” business (sole prop, partnerships, S corp)

If your Taxable Income less than $157,000 Single or $315,000 Married Filing Joint, your business is “qualified.”

Look for this Qualified Business Income deduction on new re-designed Form 1040 Line 9

 


There is a lot to learn about running a business. I don’t mean to discourage you or anyone else away from operating a homeschool business. You provide a valuable service to homeschool families! I am offering this webinar to help you understand the tax implications:

I recorded a webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to tutors, non-employee co-op teachers and other homeschool business owners! You can watch the recording at HomeschoolCPA.com/HSBIZTAXES for a small fee of $10.

Carol, thank you again for the webinar. It was one of the BEST webinars I’ve EVER attended. If you do hold another one, I would pay for it hands down.  Totally worth the $10! -Denise, webinar attendee

“I actually don’t care for webinars at all – it is not my learning style at all and I struggle to focus, but this one was extremely value and had my attention”. -Mary, webinar attendee


I hope that helps,

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

Recruiting Volunteers

 

Does your homeschool group have a hard time finding volunteers? Many groups struggle with getting people to help out. Homeschool leader Michele Gross shares some great tips for recruiting volunteers with host Carol Topp. Michele has been a homeschool leader for 15 years and currently is the founder and director of The Learning Connection in New Jersey.

In this short podcast episode (13 minutes)  Carol Topp, the Homeschool CPA, will share:

  • Don’t strive for an event. If you have no volunteers, there is no event.
  • Poll members for their gifts and talents. Michele has tips and ideas on how to collect that information
  • How to pull a volunteer out of their comfort zone.
  • Talk individually and ask for volunteers in person, if possible.
  • Train your replacement. Reproduce yourself or the group may not last.

 

In the podcast Carol mentioned …

 

Does your homeschool board know and understand its duties?

Author and homeschool advisor, Carol Topp, CPA, has created a Homeschool Organization Board Manual. It is a template to create a board member binder. It has:

  • A list of important documents to keep in your binder
  • Section dividers so you can organize the important papers
  • Tools to help you run your meetings smoothly including
  • A sample agenda that you can use over and over again
  • A calendar of board meetings

But this is more than just a few cover sheets for your binder. It is also a 55-page board training manual with helpful articles on:

  • Suggested Board Meeting Topic List
  • Board Duties
  • Job Descriptions for Board of Directors
  • What Belongs in the Bylaws?
  • Compensation and Benefits for Board Members
  • Best Financial Practices Checklist
  • How to Read and Understand Financial Statements
  • Developing a Child Protection Policy

Read more about the Homeschool Organization Board Manual

Carol Topp, CPA

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How to start an academic homeschool program



Learn the ABC’s of starting an Academic Homeschool Program

Have you considered wanting to start a homeschool program? An academic program, but not a co-op and not a for-profit business, either. But a nonprofit organization with an academic emphasis–maybe with a classical education focus.

Sounds like a great idea! But where to begin?

Feeling overwhelmed?

We’re here to help.

Carol Topp, CPA, the Homeschool CPA and Jamie Buckland are teaming up to to bring you:

ABC’s of an Academic Homeschool Program

This 90 minute webinar is packed with information to help you launch an academic homeschool program.

The cost for the recorded webinar is $20 and includes :

    • Jamie’s extensive questionnaire for homeschool parents looking to create a homeschool program.
    • Copy of Carol’s ebook The IRS and Your Homeschool Organization to help you understand nonprofit and tax exempt status
    • Webinar slide handouts

Getting an hour with these two experts and their materials would typically cost you $165.


The ABC webinar with Jamie Buckland and Carol Topp was top notch! Very informative. It was presented so clearly and in an organized manner. I thank you ladies for making your knowledge available to us-Beth M.

The webinar was extremely helpful.-Erika


 

Jamie Buckland of Classical Program Consultant has run both a for-profit classical homeschool program and is currently the Executive Director of Appalachian Classical Academy, a nonprofit 501c3 organization. She will share about Administration

  • How your culture affects an academic program when it comes to logistics.
  • What to look for in the Board of Directors
  • Why have an Advisory Council
  • Why employ tutors
  • How to train employees
  • How to assess employees
  • Why charge tuition
  • How to communicate with families

Carol Topp, CPA is the owner of HomeschoolCPA.com and has assisted more than 80 homeschool organizations apply for 501c3 tax exempt status. She is the author of 15 books and will share about Business

  • How to organize as a nonprofit
  • Applying for 501c3 tax exempt status
  • Converting a for-profit business to nonprofit
  • A timeline: How fast can you get this done?

Then Jamie wraps up by discussing Curriculum

  • How to determine curriculum for your program

$20.00 includes unlimited viewing, ebook, handouts and handouts of slides.

Carol Topp, CPA

HomeschoolCPA.com

Where to find the Taxes for CC Directors ebook

 

Here’s how to find my ebook Taxes for Licensed Classical Conversations Directors.
The link is in an updated version of the Director’s Licensing Guide (DLG) on page 54.
At the end of a paragraph on that page, there is a sentence saying for more information see Appendix M and “this document,” which is the link to the ebook. 
Appendix M is a letter from Robert Bortins talking about the book. The title of the book is not mentioned, except if you click the little blue “this document” link you will see the book itself.
Please help out your fellow CC Directors and point them to the Directors Licensing Guide (DLG) page 54, Appendix M and click on “this document.” 
If you cannot find Appendix M, or the “this document” link” doesn’t take you to the ebook, you may have an older version of your DGL. Please ask you Support Rep for the most recent version of your DLG.

 

Why can’t I get the ebook from Carol Topp, CPA, the author?
Unfortunately, I cannot distribute the ebook myself. My contract with Classical Conversations states that only CC may distribute the book. I am so sorry that it seems to be difficult for many of you to find.

 

What if I messed up my taxes?
If you read the ebook and believe you have made an error in filing your tax return, please consult a tax professional. If you prepared your tax return yourself, please contact a local tax professional to help you amend your tax return. It’s a confusing and complicated process to amend a tax return so I don’t recommend you doing it yourself. How to find a local tax professional

There is a lot to learn about running a business, so I recorded a webinar to help you understand your taxes:

I recorded a webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to tutors, directors and other homeschool business owners! You can watch the recording at HomeschoolCPA.com/HSBIZTAXES for a small fee of $10.

Carol, thank you again for the webinar. It was one of the BEST webinars I’ve EVER attended. If you do hold another one, I would pay for it hands down. Totally worth the $10! -Denise, webinar attendee

“I actually don’t care for webinars at all – it is not my learning style at all and I struggle to focus, but this one was extremely value and had my attention”. -Mary, webinar attendee


 

I hope that helps.
Carol Topp, CPA
Helping Homeschool Leaders and Organizations

ABC Test for Independent Contractors

 

Is your homeschool teacher an employee or Independent Contractor?

In 2018 California Supreme Court tried to make that questions easier to answer with a simpler 3 part test: The ABC Test for Independent Contractor status.

Can You Pass The Three-Part ABC Test?

Listen to the podcast (11 Minutes) for Carol’s reply.

 

In the podcast Carol mentioned …

In the podcast I mentioned my paying teachers or tutors of others in a homeschool business or nonprofit organization. My book, Paying Workers in a Homeschool Organization has more information about paying Independent Contractors and employees.

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.

 

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Are my homeschool co-op fees a tax deductible donation?

I’m a homeschool parent and member of a homeschool co-operative that weeks weekly. I have to pay tuition to this group for the classes my children take there. Can my children’s tuition for the co-op be a tax deduction?

 

I assume you mean deductible as a charitable donation.

Co-op fees are not a tax deductible charitable donation because services (co-op classes for your children) were received in return for the tuition payments. Tuition payments are not a tax deductible donations.They are personal expenses and are not tax deductible.

But if a parent makes a charitable gift to the homeschool group (assuming it has 501c3 tax exempt status from the IRS) above and beyond the tuition and fee payments, then this amount would be a tax deductible donation.

Some homeschool parents ask if co-op fees can be deducted as childcare expenses. My reply is “usually not” and here are the details: Are homeschool co-op fees child care tax deductions?

 


Did you get paid for teaching at a homeschool program? You may have questions about your taxes? I offer webinar to help you understand the tax implications of being a paid homeschool co-op teacher or tutor:

I recorded a webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to tutors, non-employee co-op teachers and other homeschool business owners! You can watch the recording at HomeschoolCPA.com/HSBIZTAXES for a small fee of $10.

Carol, thank you again for the webinar. It was one of the BEST webinars I’ve EVER attended. If you do hold another one, I would pay for it hands down. Totally worth the $10! -Denise, webinar attendee

“I actually don’t care for webinars at all – it is not my learning style at all and I struggle to focus, but this one was extremely value and had my attention”. -Mary, webinar attendee


I hope that helps!

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

Form 1099-MISC is due Jan 31!

 

Did you know there are some tax forms to file before April 15? There are if you are a homeschool business owner or homeschool nonprofit that paid anyone more than $600 in 2018.

I’m talking about the IRS Form 1099-MISC that is given to Independent Contractors paid more than $600 by your homeschool business or group.

In today’s podcast (10 minutes), I answer a question from a new Classical Conversations director who asks, “Do I need to give Classical Conversations a 1099-MISC for the licensing fees I paid to them?”

Listen to the podcast  for Carol’s reply.

 

In the podcast Carol mentioned Yearli.com (affiliate link) as the online service she uses to file Form 1099-MISC.

Yearli by Greatland is the best way for businesses to file 1099-MISC and W-2  forms. Best of all, you’ll receive 15% off your filings because Carol referred you.

Check them out! https://mbsy.co/rzrbp (my affiliate link)

 

 

In the podcast I mentioned my paying teachers or tutors of others in a homeschool business or nonprofit organization. My book, Paying Workers in a Homeschool Organization has more information about paying Independent Contractors and employees.

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.

 

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Can a homeschool program director deduct her child’s tuition on her tax return?

Carol,

I’m a director for a small classical homeschool program. I am required to have all my children enrolled in the program. I see this as a requirement for being a director and therefore a business expense. Can I deduct my children’s’ tuition and fees as a business expense on my tax return?

-T

 

Dear T,

No. The tuition and fees are not a business expense; they are a personal expense. They are not tax deductible as a business expense.

Just because the program you use requires you to have all your children enrolled in the program, does not make those expenses “ordinary and necessary” business expenses allowed by the IRS.

To be a bit ridiculous consider this:

I have to eat in order to stay alive and operate my business, but that doesn’t make my meals eaten at home are a business expense!

I imagine that the homeschool program wants to you to wear clothing while teaching, but your typical street clothes are not  a tax deductible business expense. They are a personal expense.

 

From the IRS:

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.

Generally, you cannot deduct personal, living, or family expenses. (emphasis added)

Source: https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses

Your children’s tuition is a “family expense,” not a business expense.

Do not deduct it on your Schedule C Profit or Loss from Business tax form.


It is not my intention to scare you or anyone else away from operating a homeschool business. You provide a valuable service to homeschool families, but you do need to understand the legal and tax implications, so I am offering this webinar to help:

I recorded a webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to tutors, co-op teachers and other homeschool business owners! For details visit HomeschoolCPA.com/HSBIZTAXES


I hope that helps,

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

Taxes for Homeschool Business Owners

 

Taxes! 2018 tax returns will be better rough with massive tax law changes and the new look for the Form 1040. Tax preparation for homeschool business owners is even more complex than regular taxpayers. Fortunately, HomeschoolCPA is here to help. I’m offering a free, live webinar.

Taxes for Homeschool Business Owners Webinar

Free live on Monday January 21, 2019 at 8 pm ET. Webinar replay: $10.

HomeschoolCPA.com/HSBIZTAXES

This webinar is for:

  • Paid teachers at a homeschool co-op
  • CC tutors getting paid as Independent Contractors
  • CC directors running a community
  • Music teachers, tutors, coaches, etc. running their own businesses
  • Business owners selling services to the homeschool marketplace

Here’s what the webinar will cover:

  • Tax changes for 2018 (highlights)
  • New tax deduction for businesses in 2018!
  • The new redesigned IRS Form 1040
  • How to pay yourself
  • Tax deductions common to homeschool business owners
  • IRS tax forms Schedule C and SE
  • Self-employment tax
  • A sample tax return.

This webinar will not cover:

  • Nonprofit organizations, but if you work as an Independent Contractor for a nonprofit, this webinar is for you.
  • Businesses organized as partnerships or corporations. I won’t have time to go into these more complex tax structures.
  • Businesses selling products like homeschool curriculum or ebooks

The webinar will be FREE for all who register and attend live. It will be free for about 24 hours after the webinar to all who register. After that, a small fee of $10 will be charged for viewing the webinar video.

 

In the podcast Carol mentioned …

Taxes for Homeschool Business Owners Webinar

Free live on Monday January 21, 2019 at 8 pm ET

Webinar reply: $10.

HomeschoolCPA.com/HSBIZTAXES

 

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Homeschool business owner under reporting her income

I’m a leader of a small, for-profit classical homeschool program. I have only been recording the amount that I retain after I pay my tutors on my tax return. After reading your website and FB comments, I’m confused. Why do I have to claim all of the money even though I don’t keep it?

-S

 

Dear S,

You, as a business owner, must report all your income om your tax return. Additionally, you can deduct business related expenses, like paying your tutors, insurance, rent, etc.

You asked, “Why do I have to claim all of the money even though I don’t keep it?
Good question!

Short answer: It’s the law. The IRS requires business owners to report ALL their income. Then the business owner shows the IRS all their business-related expenses. The difference is profit and that’s what business owners pay taxes on (and get to keep).

Longer answer: By showing your total income from your business and all your business-related expenses, you prove to the IRS that your business had little or no profit. The IRS won’t take your word for it that your didn’t “keep it.” They want proof of how much profit you had and you give the proof by filling out the numbers on the tax form (Form 1040 Schedule C for businesses).

On your tax form (Schedule C) you should have answered this question: Did you make payments that require you to file Form 1099? with a YES, because you paid your tutors as 1099 Independent Contractors and gave them each a 1099-MISC (I assume).

Then further down on the Schedule C you can deduct what you paid those tutors on Line 11 Contract Labor (or Line 26 Wages if they are employees). Then you can also show any other expenses like insurance, office supplies, etc.


It is not my intention to scare you or anyone else away from operating a homeschool business. You provide an essential service to homeschool families, so don’t stop, but you do need to understand the legal and tax implications, so I am offering this webinar to help:

On Monday January 21, 2019 at 8 pm I will be giving a live webinar on Tax Preparation for Homeschool Business Owners.  The webinar is free for the live version. For details visit HomeschoolCPA.com/HSBIZTAXES


If you did not prepare your tax return this correct way, you may need to amend your prior years’ tax returns, especially if you failed to report all of your income. You can amend up to 3 prior years. The IRS can fine taxpayers for under-reporting income. They take that very seriously!

But if you correct prior year tax returns now, the IRS usually waives any fines and penalties.
You may not owe any additional tax, so don’t panic!. I cannot tell if you will owe more tax (or get money back!) until I would see your tax return and recalculate your Schedule C.

Did you prepare the tax return yourself or use a professional tax preparer? If you used a professional tax preparer, go back to him/her with all your records for the past 3 years and see what they recommend that you do.

 

I hope that helps!

Carol Topp, CPA
HomeschoolCPA.com