Paying Workers workshop now available

Homeschool leader, did you pay a volunteer, teacher, leader or worker for your homeschool organization in 2009? HomeschoolCPA< Carol Topp,  recorded her on-line workshop for homeschool leaders.  Just in time for tax season.

Paying Workers in a Homeschool Organization

was recorded on

Friday, January 15, 2010

and is now available for you!

or listen at the Talkshoe site here: HomeschoolCPA’s Workshops

Topics:

• Volunteers. Can you pay a volunteer? How to reward volunteers.
• Independent Contractors. What are they? What IRS forms need to be filed?
• Employees? How are they different from Independent Contractors? What forms does the IRS require?

The workshop runs for one hour.

Look for more upcoming online workshops. Sign up for my newsletter to be informed of the next date and topic.

Carol Topp, CPA

Independent contractors and W-9 form

Carol,Hello!  I wanted to check with you about a sentence that is in our Independent Contractor Agreement. No one has ever given us a W-9 before even though they have signed the agreement. Why are the contractors submitting any tax related information to us? I thought they were to complete all of that completely on their own. Is that part necessary? Can you please advise on this?

Thank you so much!!!
Tanya B

Tanya is referring to a sample independent contractor agreement I include in my Money Management for Homeschool Organizations and Paying Workers in a Homeschool Organization ebooks. Both are available at my bookstore.

The W-9 is the official way to collect an Independent Contractor’s name and SSN or business name and EIN(Employer Identification Number).  This information is needed if your pay them over $600 a year and issue them a 1099MISC.

It is also the unofficial way to determine if you are dealing with ethical people.  Some people do not like giving their information on a W-9 because they were not going to report the income on their tax return.  Having them fill in a W-9 indicates that your organization obeys the law and expects them to obey the law as well.

Carol Topp, CPA

Carol,
Actually the parents with students in the class pay the independent contractors directly.  It does not come from the co-op’s funds.  Do I still need to keep track of how much they get as an annual total from the parents and work complete these forms?  If so, we may need some additional guidance.
Thank you,
Tanya

What to do with a large gift from my co-op?

Hi Carol–your website and book have provided valuable information to our group as we have grown from a medium-sized support group to a large, full-fledged co-op in just three years.  I have had the privilege of leading the group throughout this process, and I am blessed to be a part of such a wonderful group of families.

They are so wonderful, in fact, that my Board of Directors recently took up a collection from our members as a way of presenting me with an end-of-year gift of appreciation.  This was a complete surprise to me, especially when they presented me with a check totaling over $700!

My question to you is in regard to this check.  The Board collected donations from individual members and then wrote me a check on the group account.  I’m unsure of how to deal with this tax-wise.  We are a 501(c)3 with gross receipts under $25,000.  I read on your website the faq about paying an honorarium–is that what a gift of this nature is?  The gift was given with the intent of paying my expenses for our state’s homeschool convention, including the leadership conference.  If I didn’t cash the check and used the funds by using the group’s debit card to pay my hotel expenses, would this alleviate the filing requirements (since the amount would then be under $700), or does the hotel payment constitute income as well?

Thank you for taking the time to answer.  I want to make this as easy as possible for group record keeping, and I’m not sure if this is the correct way to go about it.

Blessings,
Barbie T, Florida

Homeschooling Other People’s Children. Is It Legal?

Dear Ms. Topp,

I found your website while trying to research information on hiring a private homeschool instructor for a friend of mine.  She’s a single parent who adopted a girl from Russia.  She’s having a little bit of a problem in public school and I thought it might be a good idea to homeschool her for her middle school years at least to focus on her language skills and other abilities.

Can you point me to some information on whether she can even hire a homeschool instructor to work with her daughter?  I know this may sound crazy, but I keep thinking what her daughter needs is a governess.  Or maybe I’ve read too many Bronte and Austen novels.  Any help you could provide would be most appreciated.

Sincerely,

G.A.

Dear G.A.

I think you are absolutely correct in using the term governess to describe your friend’s situation.
I have a blog post titled “Is It a Homeschool Co-op or Mary Poppins?” that addresses a similar question.

I have been asked questions similar to yours several times, so it not an unusual idea. It is quite an old idea as you references (Jane Eyre is a favorite!)

I would direct your friend to do research in three areas:
1. Her state homeschool laws and see if a non-parent is allowed to instruct a child. I imagine it is allowed, she may just have to report the governess’ name and subjects covered on an annual basis (we do here in Ohio, for example)
2. Employer laws in your state.  A local CPA would be helpful here. The governess may be considered a household employee and that has easier tax reporting requirements (like annually, not quarterly filing).  Employer taxes (Social Security and Medicare) will need to be paid.
3. Perhaps consult with an attorney to draw up an employment agreement.  Perhaps a professional tutor or nanny/au pair service in your area may have sample agreements to use as a guide.

I hope that helps!

Carol Topp, CPA

Homeschool Leader, Do You Need Help?

Paying Workers in a Homeschool Group ebook

I’m happy to announce a new ebook to help homeschool leaders

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?

This 20 page ebook covers paying workers as employees or independent contractors.  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.

Read a sample here

Price: $7.00 Available for immediate download as a pdf file

Click Here to Purchase

After you fill in the order page, you will receive an e-mail with instructions and a link to download your ebook.

I really hope you find this ebook helpful.

Carol Topp, CPA

New Ebook: Paying Workers in a Homeschool Organization

My friends, Kristen & Denise, at Homeschool Group Leader are giving away a copy of my newest ebook:

Paying Workers in a Homeschool Organization.

(I don’t even have this up on my website yet, so you are really getting first grabs!)

I get asked a lot about paying teachers, administrators and volunteers by homeschool leaders. I think this 17 page ebook will answer a lot of questions.

To get your free copy, leave a comment on Homeschool group Leaders Facebook page here:  Homeschool Group Leader Facebook page

All you have to do to get your free copy is two simple things by the end of June:
1. JOIN our Facebook group and POST a comment or an answer or ask your own question on it: I Am a Homeschool Group Leader
2. Then, BECOME a fan of our Facebook page, Homeschool Group Leader

Become a fan and you’ll be e-mailed the book within 48 hours.

This offer is only good until the end of June.

Kristen & Denise have big hearts and desire to help homeschool group leaders. They have big plans for offering support, so become a fan and learn what they are offering and connect with other homeschool leaders.

Carol Topp, CPA

Update on teachers as independent contractors

In Is Your Hired Teacher Really an Employee? I mentioned a homeschool group dealing with the IRS over teacher classification as an employee or independent contractor (IC).   They replied to the IRS via a letter stating their case for worker status an an Independent Contractor. They heard back from the IRS and the IRS determined that the teacher was misclassified as an independent contractor and should be reclassified as an employee.  The IRS wants $500 in back taxes (at least there are no penalties!)  The homeschool organization strongly disagrees and contacted a labor law attorney to help draft a letter back to the IRS.

Update:  The IRS issue was settled with no penalties, but then the State of Ohio audited this homeschool group and has fined them  $3,000-$4,000 a year for three years for unemployment taxes.  The State of Ohio sided with the IRS that the workers were employees and the organization should have been paying unemployment taxes on them.  Thankfully the state can only audit back for three years.

The issue brought to light that many (perhaps most) homeschool organizations that hire teachers pay them as independent contractors.  Most homeschool groups are small nonprofits without accounting staff to manage the paperwork of withholding and paying employment taxes, creating W-2s, etc.  It’s easier to deal with an IC than an employee.  But the IRS reminds us the the facts of the situation determine worker status, not the organization’s preference.

Also, most hired homeschool teachers are only teaching about one hour a week and are given a lot of freedom in how to conduct their class.  This was all true for my client, but the IRS still determined the teacher was an employee. She even signed a IC agreement three years in a row, so even a contract was not enough evidence for the IRS.

Here’s what I’m doing:

Please pass on this information to homeschool groups that you know hire paid teachers.  It doesn’t pay to be ignorant.

Carol Topp, CPA

Is your homeschool co-op's hired teacher really an employee?

A homeschool nonprofit I work with called me quite frantic.  They had received a letter form the IRS.  It seems that a former teacher of one of their classes  was asking for an examination of her status as an independent contractor (using IRS Form SS-8).  She thought that she should be classified as an employee of this homeschool nonprofit.  If the IRS agrees with this worker, the homeschool organization may have to pay back taxes (Social Security and Medicare) and perhaps penalties.

Fortunately this homeschool group did many things right:

How about your homeschool group?  Would you pass an IRS examination?  Do your hired teachers sign an Independent Contractor agreement?  Do you avoid controlling their work as you might an employee?  Here’s a helpful brochure regarding employee or independent contractor status (IRS Pub 1779).

I’ve written about paying teachers in a homeschool co-op setting:

Paying teachers in a homeschool co-op

W-2 and tax filings for teachers

Carol Topp, CPA

Is it a homeschool co-op or Mary Poppins?

I started my website HomeschoolCPA to help homeschool organizations, but sometimes the lines between a family homeschool and a homeschool organization get a little fuzzy. Here’s one example of the new and creative ways the people are homeschooling today.

I am considering starting a homeschool with a group of 5 children. They are all from different families and none of them is my own. I have a Masters degree in education and am comfortable working as an independent contractor. I plan on teaching these children in one of the boy’s home with the parents’ blessing. Is this legal? What do I need to do to set it up? Would the parents need to set up a homeschool co-op? I am having difficulty finding information about this for Maryland. Thanks for your help!

Mrs. A in Maryland

Dear Mrs A,

Congratulations on your new venture. Teaching other people’s children is certainly a legitimate business. You will be a modern day governess. (like Mary Poppins!)

I do not believe the parents need to set up a homeschool co-op. But you need to set up a small business. I recommend these steps:

* Pick a business name, although you can use your own name

* Consider opening a business checking account to keep your business and personal expenses separate (it helps at tax time)

* Have a written agreement with the parents about your duties and your fees (i.e. how much and when will you be paid)

* Keep good records of all our expenses, especially mileage. Read my Small Business Start-up Guide available to download here: Small Business Start Up Guide

* Set aside 20-30% of your income after expenses (i.e. 20-30% of your profit) to pay income tax and self employment tax. You will probably also need to make quarterly estimates payments to the IRS. Here’s a great blog to help you learn more about being self-employed. http://junewalkeronline.blogspot.com/

I’m not familiar with Maryland’s homeschooling laws, but here in Ohio we must notify if someone other than the parent does a majority of the instruction. Maryland may have a similar notification rule. You might want to do a little digging on-line and ask the families that are hiring you about Maryland’s homeschooling laws.

Best of success to you!

Carol Topp, CPA

Next Page »