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:

    Karen,
    Your family homeschool is a personal choice of educating your child; it is NOT a business. So there is no need to register with the AZ Secretary of state as a business.

    You CAN fund raise. The income earned from a fundraiser should be reported as Other Income on your personal tax return (Form 1040). Any expenses related to the fundraiser can be deducted as miscellaneous itemized deductions on Schedule A of your Form 1040.

    But 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. They do not reduce the taxable income of $5,000 from the fundraiser. The full amount of $5,000 will be taxed.

    Carol Topp, CPA

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