Can my individual homeschool have a fund raiser?

HomeschoolCPA has been asked this question twice lately,

Can we (an individual homeschool) be allowed to do fund raising similar to youth sports groups, scouts,etc?

What a good question. In general I say, Yes, you can participate in a fund raiser if the fund raising organization allows it. BUT, the profit you make is taxable income and you’ll need to report it on your tax return.

Another homeschooling mom e-mailed me with a similar question:

With 6 children needing school curriculum, we are coming up short in finances. We contacted a calendar company that said it would be permissible for us to sell calendars as a fund raiser for our homeschool. We accepted personal checks made out to our homeschool name (that we registered with the state school board, considered a non-profit private school). We do not have a checking account with our homeschool name on it. Therefore, we have no way to deposit them.

What is your advice to us? The checks amounted to $90. Is this method acceptable to continue as long as we pay taxes on it? Mrs. W.

By selling calendars Mrs W. was operating a small for-profit business. She is free to use the profit of the small business for anything she wishes,including homeschool books and supplies. Since Mrs W. didn’t mention what state she was in I cannot tell if her state requires business registration. Many do not require any type of registration for a sole proprietorship using your own name. You may have to file a name registration with your Secretary of State to establish a business name.

To deposit these checks Mrs W. need to open a checking account in the homeschool’s name. You’ll have to get an EIN number from the IRS at www.irs.gov (See the Q&A on my website for details www.HomeschoolCPA.com). You can then spend the money in the checking account on homeschool supplies and close it or keep a small amount in it until next year.

Mrs W. should report the $90 as income on her tax return as either Other Income on line 21 of the 1040 or on Schedule C Business Income if she had expenses from the sale of the calendars (postage, mileage, etc…)

Quite a mess for a $90 fund raiser, huh? Before you try a fund raiser for you individual family homeschool make sure its worth the effort of getting a business name, EIN, and checking account. Maybe try having a garage sale or sell something to bring in income instead!

Carol Topp, CPA

Comments

  1. Karen says:

    ok, so I am going to homeschool my son this coming year, and I would like to fundraise for the cover the cost of curriculum, sports activities, educational trips, field trips, school supplies, laptop exc. Can I do that to ease the financial burden on the family? I am registering our school name with the Secretary of State, Opening a bank account with he school name. what other things do I need to do? I live in Arizona. so , if I fundraise $5000. and i use that money for expenses and they come to $4500. do I just pay tax on the $500. remaining? would love your input, thanks so much!

  2. Carol Topp says:

    (Updated Jan 15, 2018 to account for changes in the tax code)
    Karen,
    Your family homeschool is a personal choice of educating your child; it is NOT a business. So there is no need to register your homeschool with the AZ Secretary of state as a business.

    But you are planning to “fundraise,” which is the operation of a business. The income earned from a fundraiser should be reported either as
    1. a hobby meaning it is conducted with a profit motive. The income is reported as Other Income on your personal tax return (Form 1040 Line 21)

    . Any expenses related to the hobby cannot be deducted as of January 1, 2018.

    2. A business and then your income would be reported on Form 1040 Schedule. Business expenses can also be deducted on Schedule C.

    The expenses are of homeschooling your child (books, trips, laptop, supplies) are NOT tax deductible. They are personal expenses, like food or clothing that we don’t get to deduct from our taxes. Your personal homeschool expenses do not reduce the taxable income of $5,000 from the business. Only business-related expenses (advertising, production costs, etc) are deductible on the Schedule C.

    Carol Topp, CPA

  3. Carletta says:

    Okay so I have 5 kids that I am homeschooling and I still need to build a playground and get computers and desk and bookshelves what is some things I can do to bring in some money to help with these things without getting into troubleand to keep it legal??

  4. April Agostinello says:

    I have a similar situation, but I homeschool my 3 children and 3 children of another family. As a project, we learned how to create a school website and as a idea to raise money for cirriculum, supplies and hopefully a field trip or two. We’re in NC and also considered a private school. We thought of an idea to sell Fairy Gardens that we personally make and accept donations on our website. Am I breaking any laws by not being registered as a business or non profit? 100% of profits will be spent on the school, but it goes to my own PayPal account and I state on the website that receipts for the donation being spent on the school can be available for verifying where the money went, and states that the donations are not tax deductible. I haven’t sold a fairy garden or received any donations yet because we haven’t advertised the site yet, but it dawned on me that it might not be allowed to do this without some kind of permit. I’m not sure though because I would be allowed to make fairy gardens and sell at a yard sale, so is it different if I sold them on line? Also, can I be a non-profit since I homeschool the children of two families and not just my own? (I am allowed to homeschool no more than 2 families in NC). I would greatly appreciate your feedback on this and thank you so much for all of the knowledgeable information you’ve shared on your site! Your a great.
    Best wishes,
    April@atmxacademy.com

  5. Carol Topp says:

    April,
    You and the other family are not a nonprofit, even if North Carolina classifies your homeschool as a private school. Private schools only means you are not funded with public (i.e. government) funds. BTW, some private schools are for-profit businesses; not all private schools are nonprofit organizations.

    In order to be a tax exempt nonprofit, the IRS says you must be operated and organized as a nonprofit. You “must not be organized or operated for the benefit of private interests” (Source: https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501c3-organizations). So benefiting only you and the other family is “private interests” and not serving a public good.

    You are NOT a nonprofit. You are a business. Please stop calling your sales “donations.” They are simply sales of products by a business.

    You probably need to register in North Carolina as a business and probably get a vendors license to collect and pay sales tax.
    Better start googling “Start a small business in North Carolina.”

    My books Micro Business for Teens could help your children start this as their business (not yours) and learn a lot too!

    Carol Topp, CPA

    BTW, your comment about selling your products at a yard sale is not quite correct. Sure you can sell fairy gardens at a yard sale, but then you’re running a business and the profit is taxable. In yard sales, you’re generally selling household items you bought over many years and used personally and you’re selling them for less than you paid for them. But that’s not true for your fairy gardens. You did not use them personally and you are selling them at a profit, so it’s a business.

  6. Carol Topp says:

    Sure! Get a part-time job or start a micro business. These books can hep : Micro Business for Teens. Even though they are geared for teenagers a lot of adults find them helpful too.

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