How to know your status with the IRS

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We are trying to figure out what our status with the IRS is. We are a support group/co-op and just recently learned that we should be filing the 990N. We registered our name with the state in 2008. We got out EIN in 2009. We became incorporated in September 2014. Our annual gross revenue is less than $5,000.

 We have searched the IRS database of groups that have had their tax exempt status revoked and we are not listed. How do we find out what our status is and when the IRS is considering our date of formation so we know how to proceed?
Thanks for your help!
Anna in Ohio
Dear Anna,

You referred to an IRS database of exempt organizations called Select Check. I use it frequently to check on the status of nonprofit organizations.

But many times a homeschool nonprofit organization cannot find their name in the IRS database, usually because they have not applied for tax exempt status. That’s the situation for your group.

Your legal status is that you are a nonprofit corporation who can self declare your 501(c)(3) tax exempt status. Since your revenues are less than $5,000,  you can self declare your 501(c)(3) tax exempt status and do not have to officially apply for tax exemption.

The IRS considers your date of incorporation as your “date of formation.” You should get a new EIN for the new corporation and not use the old EIN from 2009. The IRS considers a corporation a new legal entity and you should get a new EIN to match it. Getting and EIN from the IRS

Even though you didn’t have to officially apply for 501(c)(3) status, the IRS does require you to file an annual information return, the Form  990-N. To be able to file the Form 990-N, you need to call the IRS Customer Account Services at 1-877-829-5500 and ask to be added to their exempt organization database so you can begin filing the Form 990Ns. It typically takes 6 weeks after you call to be added to the IRS database.

Say something like this,

“We’re a new 501(c)(3) educational organization and my CPA said I needed to get added to the IRS exempt organization database so we could start filing our Form 990-N.”

They will ask for :

  • your EIN(Employer Identification Number)
  • organization’s name
  • address
  • a contact name
  • Date your fiscal year ends. Many support groups operate on a calendar year, but some operate on a school year with a year end of June 30 or July 31. Look at the form you filed when you applied for your EIN (SS-4) to see what you chose as your fiscal year end.
  • They may ask if you have “organizing documents.” They mean bylaws, Articles of Association, or Articles of Incorporation.

Call the IRS early in the morning. They open at 8 am ET and you can usually get through pretty quickly of you call then. Record the date you call, the IRS employee name and their identification number.

Be sure you go online to file the Form 990-N anytime after your fiscal year ends and before its due date which is 4 1/2 months after the end of your fiscal year.

How the IRS sees homeschool co-ops (podcast)

IRS and homeschool groups

In this episode of the Dollars and Sense Show podcast, host Carol Topp continues her topic “Who’s Afraid of the IRS?” and discusses how the IRS sees homeschool co-ops and 501(c)(3) tax exempt status.

Listen to the podcast

Listen to the first part of this presentation where Carol discussed homeschool support groups and IRS 501(c)(7) tax exempt status as a Social Club.

Get a copy of the handout.

Carol also mentioned the article “Do You Know About IRS Required Filings for Homeschool Organizations?” Get it here.

The IRS and Your Homeschool Organization

Carol’s book, The IRS and Your Homeschool Organization, is available here.

 

Homeschool group answers IRS questions

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Many homeschool organizations are finding that the new IRS Form 1023-EZ makes applying for 501(c)(3) tax status quite easy (compared to the full  26-page Form 1023!)

But, unfortunately, one homeschool group, Crossroads Co-op from Maryland, found their application held up because the IRS wanted more information. Specifically, the IRS asked for:

  1. An original copy of their organizing document. Fortunately Crossroads had Articles of Association complete with the IRS required language all ready to go!
  2. A detailed description of their activities including who, where, when, fees, and time and resources
  3. Actual revenues and expenses for 3 years.

I helped Crossroads write a reply to the IRS and in only 5 days, their 501(c)(3) status was granted!

We don’t think that the IRS was targeting Crossroads Co-op or homeschool groups; we think Crossroads was just randomly selected by the IRS to provide details.

The important lesson learned is that nonprofit organizations need to have their financial information and organizing documents ready to send into the IRS when asked.

Applying for 501(c)(3) tax exempt status is more than just filling out the Form 1023-EZ online. It involves properly structuring your nonprofit.

Crossroads had done that, so they were able to answer all the IRS questions and get their tax exempt determination letter in a timely manner.

If you need help applying for tax exempt status for your nonprofit organization, contact me.

 

Carol Topp, CPA

 

Did your homeschool group lose its tax status? (podcast)

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Your homeschool group may have lost its tax exempt status and not even know it! I explain this problem in an episode of the Dollars and Sense Show podcast.

Listen to the podcast here

In 2006, the IRS made filing an annual report (Form 990/990-EZ, 990-N) mandatory for nonprofit organizations. Nonprofits that failed to file the Form 990 for three consecutive years, had their tax exempt status automatically revoked.

In the podcast, I discuss how to know if your group’s tax exempt status was revoked and how to get it back.

Episode #36 Required IRS Reports for Homeschool Groups explains the Form 990.

My book The IRS and Your Homeschool Organization is a helpful resource for homeschool organizations considering the benefits of tax exempt status. Available here.

If you would benefit from a personal phone consultation, I’d would be happy to help your homeschool organizations. Contact Carol.

Carol Topp, CPA

Homeschool groups awarded 501c3 status in less than 10 days!

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Congratulations to the following homeschool organizations who received their 501(c)(3) tax exempt status from the IRS recently and in less than 10 days.

 

The Learning Connection of NJ

Christian Homeschool Organization Interact Connect encourage (CHOICE) of Peidmont, SC

Character Co-op of Noblesville, IN

Texas Bay Area Catholic Homeschool Organization in League City, Texas

 

If your homeschool organization needs help with applying for tax exempt status, please consider letting me, Carol Topp, CPA,  guide you. Here’s a description of my services.

“I have to tell you that I have been extremely busy and feel a less than qualified for this task.  We are all very pleased that you offer this service.”  -Karen, Homeschool leader in SC

IRS reports your homeschool group needs to file every year

IRS reports for homeschool groups

Your homeschool group should be filing some reports every year with the IRS. Did you know that?

Carol Topp, the HomeschoolCPA, explains what forms homeschool groups should be filing with the IRS in this episode of the Dollars and Sense Show podcast.

Listen to the podcast here

In the podcast, Carol answers common questions from homeschool leaders such as:

  • We were told if our income is under $25,000 a year, we don’t have to file anything with the IRS. Is that true?
  • What changed? We never had to file anything with the IRS before!
  • But we’re not a 501c3 organizations (or don’t want to be), so why do we need to file anything with the IRS?
  • We don’t like government intervention. Why do we need to have anything to do with the IRS?
  • Our homeschool group doesn’t make any profit, so why do we have to file a tax return?
  • We’ve never filed anything with the IRS? We didn’t know we had to! Now what? Will be owe back taxes?

Here’s a helpful FAQ page explaining the IRS Form 990-N.

How to get added to the IRS database to file the Form 990-N.

If all this is new to you, don’t panic!

We can arrange a phone consultation with your homeschool leaders. Together we can sort out what needs to be done.

Contact me here.

Carol Topp, CPA

 

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.

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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 grants 501c3 status to two homeschool co-ops

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Congratulations to SEEK in Indiana and Home Educators TREK in Illinois on receiving  501(c)(3) tax exempt status with the IRS!

I was happy to help both these organizations receive 501(c)(3) tax exempt status for the IRS.

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