Church adopts homeschool group. What’s next?

The church that my homeschool co-op meets at has agreed to take us under their “ministry umbrella” for tax purposes, etc. Can you point me in the direction of what to do next? The pastor asked me what he should do to make this happen.

Thank you so much for any help you might offer!

Jill

 

Jill,

Oh that’s marvelous! Really. So few churches are willing to include homeschool groups as a ministry. It’s like your group has been adopted and brought into the family of this church.

Put something in writing stating that the church grants your organization permission to use their Employer Identification Number (EIN) and sales tax ID number as one of their ministries. Also put into the agreement that the church will cover your program under their insurance plan.

Ask if all the financial transactions will go through the church’s checking account or if they prefer you set up a separate checking account using their EIN with your homeschool group’s name.

If you pay anyone (employees or ICs) ask if the church will handle the payroll filings (hopefully they will).

There may be a few other details to iron out like background checks (who pays for them, your group or the church) and details on rooms you can use, building security, cleaning up, supplies and equipment your group can use, etc.

Count your blessings!

Carol Topp, CPA

 

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Church is worried about legal status of homeschool group

Photo credit http://webesteenphoto.blogspot.com

The leadership of our church is concerned that our homeschool  co-op does not have any legal status. They suggested that we look into becoming something official, like a 501c3.

The issue is that we are a pretty small group, and the teachers are not paid by the co-op, but by the individual students directly. At this point, there really isn’t any money changing hands. I have a lot of reservations about the 501c3 status, too.

Is there another “legal entity” that our smallish co-op could become that would let us do some basic things like have a checking account? We don’t really have any money to put toward legal fees or anything like that, so it would have to be very inexpensive to set up.

Thanks so much for all your work.

Kerry in Ohio

 

Kerry,

It’s nicest if the church takes you under their tax exempt status as a ministry, but for legal and insurance purposes a lot of churches are reluctant to do that.

Two choices

There are really two legal structures you group can be: nonprofit or for-profit. Most homeschool groups are nonprofits and in addition have tax exempt status from the IRS.

If your gross annual income is under $5,000 per year, you do not have to file any application to be tax exempt with the IRS; you can simply self declare your 501c3 tax exempt status. That’s pretty easy!

You will have to file an annual information return with the IRS called a Form 990-N, but it’s quick and easy. See my 990-N FAQ page here: http://homeschoolcpa.com/irs-form-990n-faq/

If you do not self declare 501c3 status (and file the annual 990-N), then, by default, your organization is a for-profit business. That’s your other legal alternative. The income and expenses would have to be reported on someone’s tax return as a business. The church may not rent space to a for-profit business (my church won’t), so you should read more about nonprofit and 501c3 status.

IRS and Your Homeschool Org cover

My book The IRS and Your Homeschool Organization can calm many of your fears.

I hope that helps.

Carol Topp, CPA