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:
2. They did not control the content of the class, nor dictate to the teacher what curriculum she must use.
3. They offered no benefits to teachers.
4. They did not train their teachers.
But these are only a few of the factors to address in making a worker determination.
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 an RS brochure regarding employee or independent contractor status (IRS Pub 1779).
My new book Paying Workers in a Homeschool Organization explains in detail how to determine of your worker is an employee or an Independent Contractor.
You may want to have a private consultation to discuss your unique situation. I offer a Worker Classification Determination consultation to put your mind at ease.
Carol Topp, CPA
Paying Workers in a Homeschool Organization-2nd edition