On the application form (Form 1023), the IRS asks about scholarships and Tricia asks:

 We do provide scholarships for our members that cannot pay their $30 membership fee.  Should we check “yes” for line 22?

Part VIII, Line 22 is for “real” scholarships like the kind a high school graduate is given to go to college.

What your group offers is a fee discount. I find that co-ops frequently call these fee discounts “scholarships.” That is the wrong word to use.

Do not call a fee discount a scholarship.

I recommend that you change your wording in your co-op and especially change the word on your application to the IRS.

I think you should check the box NO. You do not provide scholarships as the IRS is using the word.

Carol Topp, CPA

Hi Carol,

 

We wanted to share our excitement in that Hartsville Home Educators, Inc. of Hartsville SC has been granted their 501(c)(3) status.

You have been a great help to our organization as we have developed by-laws and our co-op. We purchased your book and submitted our IRS application in May and was awarded our status in November.

Thanks for all you do for the home school organizations throughout the country.  We could not have done this without your guidance.

Terri King

Hartsville Home Educators

Do you know the pros and cons of 501c3 status?

Do you know what 501c3 status could mean for your homeschool group?

My book The IRS and Your Homeschool Organization could help your group as well.

A 120 page book explaining the pros and cons of tax exempt 501c3 status. Is it needed? Is it worth it?

Table of Contents
Sample pages

Price: $9.95

Ebook version $3.99 (pdf format)

Kindle version $3.99

Smashwords version $3.99 (multiple e-reader formats for Kindle, Nook, Sony, etc)

Hi Carol.

Thank you for all the help you have already given our homeschool community!

There is a homeschool co-op that allows teachers to charge the parents $0-$45 per student.  As a teacher, how would I report any net income on my income tax return? (payments are made directly to the teacher).

Best regards,

Lynn (New York)

Lynn,

You report all your income and expenses on a Schedule C or the shorter form Schedule C-EZ as part of your federal form 1040.
The net amount is carried onto page one of your 1040 and added to your other income  from W-2s etc.

If you made more than $400 in net income in 2011, you will also have to fill in a Schedule SE and pay Self-employment tax (its Social Security and Medicare taxes for self-employed people).

Hope that helps!

Carol Topp, CPA

Homeschool leaders: If you hired and paid a teacher in 2011 you may need to filing some paperwork with the IRS! The deadline is January 31, 2012 to give your workers a 1099MISC or W-2.

Find out what to do in my ebook Paying Workers in a Homeschool Organization.

Only $3.00.

The IRS gives a $250 tax deduction to educators for unreimbursed supplies they spend in the classroom.

Can homeschoolers take this deduction?

The IRS guidelines say to be an eligible educator:

“You work at least 900 hours a school year in a school that provides elementary or secondary education, as determined under state law.”

To work means to get paid for your work as a teacher-employee. Homeschool parents are not employees of a school. We do not get paid; we do not get a W-2. The IRS will check for a W-2 from a school if a taxpayer takes the Educator Expense deduction. Homeschoolers would not have a W-2 from a school, even if your state classifies your homeschool as a private school.

The Educator Expense Deduction was initiated by President Geo W. Bush. It expired with all the other Bush tax cuts,on December 31, 2011. It will not be available for 2012 unless renewed by Congress.

I do not recommend that homeschool parents take the Educators Expense deduction. Sorry.

Carol Topp, CPA

P.S. Here are my required “lawyer” words:
Internal Revenue Service Circular 230 Disclosure: Advice relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending to another party any transaction or matter addressed herein.

Did your homeschool group pay any workers, administrators, or teachers in 2011?

Don’t forget the laws about reporting payments to employees or Independent Contractors!

Don’t know the laws?

Listen to my (free) podcast Paying Workers in a Homeschool Organization

or

purchase my ebook, Paying Workers in a Homeschool Organization

Now available in pdf or Kindle format.

The National Taxpayer Advocate’s 12/31/2011 Report to Congress is critical of IRS delays in releasing the Cyber Assistant and recommends that Congress require the IRS to move forward on making it available. (You can view this report at http://www.irs.gov/advocate/article/0,,id=252216,00.htmlis.)

In response, the IRS said, “Software testing revealed problems requiring correction prior to public launch, and the IRS had to delay the release. Because the IRS must balance a number of competing information technology needs, we cannot presently predict when Cyber Assistant will be available.”

So it looks as if the Cyber Assistant is on the back burner for now.

Sandy Deja
501c3book.com
Author of Prepare Your Own 501(c)(3) Application

Background: Cyber Assist was (is?) the IRS’s program to allow nonprofits to apply for tax exempt status online. The IRS was proposing to lower the application fee from $400 or $850 to only $200 for organizations applying online using Cyber Assist.

Thank you Sandy for the update, even if it’s not what we want to hear…

Homeschool leaders, Sandy has a terrific website http://501c3book.org/ and ebook Prepare Your Own 501(c)(3) Application to help you apply for 501c3 tax exempt status. Don’t go down that road alone!

Carol Topp, CPA

Hi Carol,
We are a homeschooling group for ages 9-14, designed for the purposes of socialization, support, educational and career guided opportunities as well as promoting volunteerism throughout our community.

I’m trying to open a checking account for us. I contacted the IRS and have an EIN number now. Now, the bank wants me to file a fictitious name (have to publish in Legal Notices section of newspaper for $25 minimum, and fill out a request for fictitious name through our state that costs $50. They are considering it a sole proprietorship.

Just double checking to see if this is the best way to go, as it will cost $75 minimum plus the costs of checks (about $20).

Thanks for your time,

Karen

Karen,

What you described is a nonprofit organization, not a sole proprietorship.

When you obtained an EIN from the IRS did you check the box saying “Nonprofit”?
Hopefully, you used the name of your group on the EIN application as well.
If so, tell that to the bank (and show the IRS confirmation letter of your EIN) and you should not need a name registration.

If not, then you need to recontact the IRS. Close down the EIN they gave you and get one in the name of your group as a nonprofit organization (probably a 501c7 social club).

Read my article here on nonprofit social clubs:
http://homeschoolcpa.com/wp-content/uploads/2009/09/HomeschoolGroupsAs-SocialClubs.pdf

I hope that helps.

Carol Topp, CPA

HomeschoolCPA.com

Thanks Angela for sharing this helpful information!

Carol Topp, CPA

Get your homeschool group’s finances organized!

I have lowered the price for Money Management for Homeschool organizations from $10.00 to $3.99.

This 39 page ebook covers money management for small, medium and large sized groups. Sample forms and examples of financial statements in clear English are provided. Also covered are topics such as using Quickbooks, collecting fees, creating a budget, insurance, and hiring paid teachers. All written specifically for homeschool groups.

Click here to read a sample and to purchase

Happy New Year 2012!

Carol Topp, CPA

Hi Carol,
Fund raising is really on my heart right now. Most of our group operational expenses are covered by membership fees and activity fees, right now.  Probably the biggest need is for families who can’t afford class tuition or activity fees.

We want to be able to reduce the expenses overall, but also help these homeschooling families who are on very tight budgets.  I would like to have fund raisers during the year that families can participate in and know that if they work very hard the funds they raise can be applied to their own fees.

My sister used fund raisers through her high school band program to raise money for her own trip to an out-of-state band conference.  Some parents just wrote a check and their kids didn’t have to work the fund raiser, while others (like my sister) needed the help and worked hard for it.  How can this idea apply to our fund raisers?

Our treasurer is concerned about crossing the line and breaking the rules about fund raising with the IRS.  We don’t want to do that.  I just don’t want money to be a barrier for some great kids.

Angela