How to get added to the IRS database and file the Form 990N

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Carol,
We’re a newly organized homeschool support group. Is there anything we need to do with the IRS to establish ourselves as a 501c7 social club, or do we just need to get our EIN and start filing the 990N?

Thanks again! I really appreciate your help. :)

Melissa

 

After you get your EIN (Employer Identification Number), you won’t be able to file the 990Ns just yet.

Since you have not applied on paper for 501(c)(7) status  (you can “self declare” 501c7 status and don’t have to file the paperwork), you are not in the IRS database (yet), so you need to call the IRS Customer Account Services at 1-877-829-5500 and be added to their database so you can begin filing the Form 990Ns.

It typically takes 6 weeks after you call to be added to the IRS database.

Say something like this, “We’re a brand new 501c7 Social Club and my CPA said I needed to get added to the IRS exempt organization database, so we could start filing the 990Ns.”

They will ask for your EIN and name, address and probably a contact name.

They may also ask what date your fiscal year ends. Many support groups operate on a calendar year, but some operate on a school year with a year end of June 30 or July 31. Look at the form you filed when you applied for your EIN to see what you chose as your fiscal year end.

They may ask if you have “organizing documents. They mean bylaws or Articles of Association. So tell them if you have bylaws or Articles of Association. Samples can be found here.

Finally, if they tell you you must file a Form 1024 to obtain 501c7 tax exempt status, tell them (with confidence) your CPA informed you that you can “self declare” tax exempt status as a social club and do not have to file the Form 1024.

Call the IRS early in the morning. They open at 8 am ET and you can usually get through pretty quickly of you call then, Record the date you call, the IRS employee name and their identification number.

Be sure you go online to file the Form 990N anytime after your fiscal year ends and before its due date which is 4 1/2 months after the end of your fiscal year. So if you operate on a calendar year, the 990N is due May 15.

Coming soon…how to motivate every member in your homeschool group

Way back in 2009, I was asked by Denise Hyde to review her book One By One: The Homeschool Group Leader’s Guide to Motivating Your Members.

It was fantastic! Really good. Really helpful. Here was my review:

“One by One is a book that every homeschool leader needs, but does not realize the need until it is too late! Every leader has difficulty motivating members or getting volunteers, but they only ask for help when it’s too late and they are tired, frustrated and want to quit! Instead, leaders should read Kristen and Denise’s very practical and encouraging book.

Inside you will find the three secrets to successfully motivating every member and then practical, real-life ways to apply those skills to everyone from moms to teenagers. I especially appreciated the true stories of how Kristen and Denise implemented everything they suggest.

They know their stuff and have a heart to share what they know with others. Take some of the advice, share it with your fellow leaders, apply it and you will find happier members, a more relaxed leader and a successful group!”

 

Well, now I’m pleased to announce that Denise is updating the book and I will be helping her get out the word about this terrific resource.

She’s going to set the price a bit (well, a lot) lower and offer it in print and in ebook format.

There is a little more work to do on the book, but it should be ready  in a few weeks.

I’ll send out an email when it’s ready. And I’ll probably have Denise on my Dollars and Sense podcast to help you motivate every member!

 

Carol Topp

 

Facebook party for homeschool leaders!

I’m looking forward to joining homeschool leaders in Williamsburg, VA for the Home Educators Association of Virginia Leadership Conference March 13-14, 2015.

But first I get to meet these leaders online at a Facebook Party!

What: Facebook Party for Virginia homeschool leaders

Who:  The sponsor is Home Educator Association of Virginia

When: Tuesday, January 27, 2015 at 8-9 p.m. ET

Where: https://www.facebook.com/groups/HEAVLeaderSupport/

At the Facebook Party I will share about the topics I will discuss at the Leadership Conference

Homeschool Leadership is Like Marriage—Know What You’re Getting Into!

Who’s Afraid of the Big, Bad IRS? How the IRS Sees Homeschool Organizations

Top(p) Ten Tips for Running a Homeschool Organization

There will also be time for questions from leaders.

See you on Facebook and maybe in Williamsburg, too!

Carol Topp, CPA

Ask your board these question to spark discussion and planning

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Does you homeschool organization’s board meeting always seem to focus on minor details and irritations? Do you lack direction and forward thinking?

Nonprofit guru TomOkarma shares some great ideas for you board members in  Board Presidents That Don’t Bore

He recommends taking 10 minutes at the beginning of your next board meeting and asked questions like:

  • If we were starting up our organization today brand new, what would it look like?
  • Would we recreate what we have now, or create something that looks different?
  • Say we just came off the most successful year we ever had from programming, fund development and organizational standpoints. What key steps or decisions did the board make resulting in these great results?
  • If we could do one thing right now that would improve our organization (whether internally or externally in our service delivery) and neither time nor money was an issue, what would that be?
  • Ask each member to explain your organization’s history, mission, and programs. It will be a good test!
  •  Pretend it was the worst year ever – what happened and how do we right the ship?
  • How about using the approach “Here’s what the organization is trying to achieve. In the past, it has achieved “A”, “B” and “C” in this way. It has not been able to achieve “D”, “E” and “F”. What do you think we should do in order to achieve these things?

Those ought to generate some discussion! You may have to set a timer to stop the idea flow and get down to business!

Or set aside an evening or a weekend to organize a board retreat and discuss these questions.

HS Co-ops Cover_400If you don’t have a board, make that a goal. My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will help you find members to help you lead your group.

And later in 2015 I hope to offer a new resource to help you motivate every member of your homeschool organization…details to come!

 

Carol Topp, CPA

 

Should my homeschool co-op be giving any tax forms to our teachers?

Form 1099-MISC for 2010 with calculator and pencil on it

Hi Carol,

I had someone ask if our homeschool co-op will send them a 1099 for payment we made to her this year.  To the best of my knowledge, we have never done this before.  Is this something we should be doing?  Is there a guideline for how and when to do this?
-Trish

If you paid an individual more than $600 for their services in a calendar year, you are supposed to give them a Form 1099MISC and a copy goes to the IRS.

You do not have to provide 1099MISCs to corporations or for goods you purchased or for reimbursements of expenses.You only give 1099MISC to individuals who you paid for hired work.

It’s a good practice to collect the legal name, address and SSN from every person you pay for their services before paying them. Use IRS Form W-9.

I use a service Yearli.com to prepare the Form 1099MISC. They charge about $5/form, mail a copy to the recipient and to the IRS. It’s very easy to use.

The 1099MISC is due to the recipient by January 31 and to the IRS by Feb 28 each year.

Cover Money Mgmt HS Org

I cover paying workers in Chapter 12 of my book, Money Management for Homeschool Organizations.

Carol Topp, CPA
HomeschoolCPA.com

What is the difference between a homeschool support group and a homeschool co-op?

From the Facebook group I Am a Homeschool Group Leader, came this question:

After much reading, I have come up with a question… What is the difference between a homeschool group and a homeschool co-op?

I took over the leadership of our local, small, informal, unincorporated homeschool group last year. We’re a group of families that meet for unstructured socialization/play time twice a month. We offer classes for all age groups, workshops for moms & dads, date nights/coffee nights for moms & dads, monthly field trips, monthly activity days, and even some on-going activity days. After reading Carol Topp’s book  Homeschool Co-ops, and talking with the HSLDA support group liaison in regards to support groups, I am thinking that the group I am in charge of is a style of co-op. Is this right, wrong, both or neither?

-Jacquelyn

 

I make a differentiation between co-op and support groups because their tax exempt status is different in the eyes of the IRS.

Homeschool co-ops have an educational focus and qualify for 501(c)(3) status as educational organizations.

Homeschool support groups have social interaction and support as their focus and the IRS would classify them as 501(c)(7) Social Clubs.

Here’s an article explaining the differences. It includes a chart comparing 501(c)(3) (co-ops) and 501(c)(7) (support groups). Homeschool Groups As Social Clubs.

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As homeschooling grows, I’ve seen support groups change into co-ops and co-ops add support activities. Things are not as clear cut as my chart make it seem! So when I consult with a group I ask about:

  • their activities
  • where do they spend their time and their money?
  • what is the source of most of their income and expenses? (that’s how CPA’s think!)

From hearing about their activities and money, I can usually help discern if their group is a 501(c)(3) (educational co-op) or 501(c)(7) social club (support group).

It sounds like Jacquelyn’s group is a support group. Support groups fit the IRS 501c7 social club status and can “self declare” their tax exempt status without officially applying. (educational organizations with more than $5,000 annual gross revenues must apply for 501(c)(3) status).

But the IRS says all nonprofits-even small support groups- are supposed to be filing the annual Form 990N.  Read more here: http://homeschoolcpa.com/irs-form-990n-faq/

For Jacquelyn’s group and hundreds like them, the tipping point comes when the group gets an EIN from the IRS to open a checking account. That’s then the IRS knows about your group and it will need to start filing the annual 990N (it’s online and only 8 question. it takes about 5 minutes once a year).

Important disclaimer: I stated that a co-op is a 501(c)(3) and  a support group is a 501(c)(7), but that is  my interpretation of the IRS tax code. You will not find homeschool groups mentioned in the IRS rules and regulations. (PTL!)  I have discussed homeschool group classifications with IRS employees, read a ton and have attended workshops put on by the IRS. I’m a CPA and homeschooled for 14 years. I still belong to my support group, even though I retired from homeschooling 4 years ago. But I want to make it clear that I am using my CPA knowledge and homeschool experience to help homeschool organizations understand and comply with IRS regulations.

I hope that helps!

Carol Topp, CPA

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P.S. Jacqueline found Homeschool Co-ops: How To Start Them, Run Them and Not Burn Out helpful.

Maybe you would, too.

 

Can we get an EIN without giving a name and SSN?

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Carol,
First, I would like to thank you for writing the very informative book “The IRS and Your Homeschool Organization”.

I am president of a small homeschool organization (15 families, 50 children) in North Carolina. I respect the need for an identity with government, so (after reading your book) I have decided to pursue incorporation in North Carolina.

The question I have is regarding having a tax ID number (Megan is referring to an Employer Identification Number, EIN) for the group in order to open a bank account, etc. Do we apply for a tax ID after we are incorporated?

Also, all methods of applying for a tax ID that I have seen involve applying using my Social Security Number (SSN). I have to admit that using my personal information for the group makes me uncomfortable. Is there any way to get a tax ID for the group without using an individual’s SSN?

Thank you in advance for your time and attention.

Megan D in NC

Megan,
Thank you for your kind words. I’m glad the book was helpful!

You apply for your Employer Identification Number (EIN) after you are incorporated in NC.

I completely understand your reluctance to put your Social Security Number  on any application. We need to be careful to protect our SSNs in this day of identity theft.

But the IRS requires an EIN to be tied to a human being.

This came about because the IRS found that businesses were applying for EINs with a temporary name listed. Sometimes filings services such as attorneys or Legal Zoom were putting their names on the EIN, but were not the real person(s) responsible. I’ve also read that terrorist organizations were applying for EINs with fake names.

So, the IRS needed to tie the true responsible person to the nonprofit organization. They now require a responsible party name and Social Security Number on the EIN application to stop any misrepresentation or deception.

Carol Topp, CPA

P.S. You can change the responsible party name and SSN on the EIN at a later date if you are no longer involved with the nonprofit. File IRS Form 8822-B to change the responsible party.

QuickBooks for free to nonprofits

 

Intuit, the makers of QuickBooks, the grand-daddy of accounting software , is offering its 2015 Premiere Nonprofit software package for free* to qualifying nonprofit organizations.

*A $45 Administration fee will be charged, but that’s pretty cheap. QB nonprofit sells for $250+

If eligible, your organization may receive one accounting product per fiscal year (July 1 to June 30).

Consult the eligibility and restrictions page to review your organization’s eligibility to participate in this program.

  • Donated product will be distributed under this program to qualifying organizations only, not to individuals.
  • Organizations may request one accounting product per fiscal year (July 1 to June 30).
  • Only organizations with an annual operating budget of less than $10 million are eligible to receive this donation.
  • This donation is available only to nonprofits with 501(c)(3) designation and to public libraries.

Get your copy of QuickBooks here: http://www.techsoup.org/intuit

 

Cover Money Mgmt HS OrgThe new year is a great time to start using accounting software.

If you need help with record keeping, consult my book, Money Management in a Homeschool Organization

Also consider QuickBooks training with me, Carol Topp. I can set up your Chart of Accounts and walk you through how to send invoices, enter expenses, make deposits and run reports. Contact Carol

Carol Topp, CPA

 

HomeschoolCPA.com named one of 50 Best Accounting Blogs

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I was pleased that HomeschoolCPA.com was named one of the

50 Best Accounting Blogs for 2014

by Accounting Degree Review

I try very hard to provide helpful information and consulting services to a homeschool leaders. I enjoy combining my accounting knowledge and homeschool experience (I homeschooled for 14 years) to help homeschool organizations.

It’s also nice to be recognized for my blogging!

 

Carol Topp, CPA

 

 

 

 

 

Congratulations! Another homeschool group receives tax exempt status

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Congratulations to Christian Homeschool Organization Interact Connect Encourage (CHOICE) in South Carolina on recently receiving 501(c)(3) tax exempt status with the IRS.

I was happy to help this homeschool organization use the new IRS short Form 1023-EZ. They received their tax exempt letter in 3 weeks.

CHOICE’s leader wrote:

Thank you so much for all of your help.  We have you in our budget now, so that we can contact you with questions whenever we need answers.

I am a little nervous about knowing what forms need to be sent where and when.

If you’re uncertain about what your organization needs to file with the IRS and your state, please contact me. I can help you sort it all out.

Tax exempt status is not automatic! Do you know what forms your homeschool organization should be filing with the IRS?

My (recently updated) book The IRS and Your Homeschool Organization could help you understand when and how to become tax exempt.

Price: $9.95 paperback $3.99 ebook

Carol Topp, CPA