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.

501c3_c7Comparison

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.

 

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

IRS approves 501c3 status for homeschool group in 2 weeks!

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The IRS is certainly speeding up the process to get 501(c)(3) status for small, qualified organizations!

Congratulations to Heritage Home Scholars in Tennessee  on receiving  501(c)(3) tax exempt status with the IRS! They received the coveted IRS determination letter granting them 501(c)(3) tax exempt status in less than two weeks from applying!

I was happy to help them receive 501(c)(3) tax exempt status for the IRS. Learn more here about how I can help your homeschool organization.

 

Do you know the pros and cons of 501(c) tax exempt status? Do you know what tax exempt status could mean for your homeschool group?

My (recently updated) book The IRS and Your Homeschool Organization could help your group as well.

Price: $9.95 paperback   $3.99 ebook

 

 

Carol Topp, CPA

IRS approves tax exempt status for another homeschool group!

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Congratulations to Blount Home Education Association in TN on receiving 501c3 tax exempt status from the IRS.

Blount applied in September 2013 and received their determination letter from the IRS on January 2, 2014.About 3 1/2 months. That’s not too bad considering the IRS was shut down for 16 days during that time.

Happy New Year Blount Home Education Association!

 

If you need assistance in applying for tax exempt status withe IRS, please contact Carol Topp, CPA for assistance.

Read about Carol’s services here.

 

 

 

Kindle editions to Paying Workers and IRS and Your Homeschool Organization

I’m pleased to announce that two of my books are available for the Kindle:

        

 

Paying Workers in a Homeschool Organization Kindle price $2.99

The IRS and Your Homeschool Organization Kindle edition $3.99

Available here:

http://www.amazon.com/Carol-Topp/e/B00279FSNQ

 

Don’t have a Kindle? No problem! Read Kindle books on your PC with this free application:

Kindle for PC

 

Carol Topp, CPA