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

 

Save

Can my homeschool group collect money now that’s for next year?

 

Many homeschool groups collect deposits in the spring for next fall’s programs. This helps with determining how many families will be returning. But how should these early deposits be recorded in a homeschool group’s bookkeeping? Carol Topp, CPA the HomeschoolCPA offers some ideas.

 

Listen to the podcast

In the podcast Carol mentioned a handout that explains how to record early deposits in accounting software like QuickBooks.

Here it is: Deferred Revenue in QuickBoooks (pdf)

Do you have more questions about managing the money in your homeschool organization?

MONEY MANAGEMENT FOR HOMESCHOOL ORGANIZATIONS: A GUIDE FOR TREASURERS

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

Save

Save

Save

Save

Save

Is there a penalty for misclassifying my homeschool group’s workers?

Is there a penalty for misclassifying my homeschool group’s workers?

The IRS imposes strict penalties on an employer who treats workers as Independent Contractors when they should be employees. These penalties have put homeschool businesses and nonprofits out of business. Carol Topp, CPA discusses this topic and some programs the IRS has to avoid crippling penalties.

Listen to the podcast 

Worker Classification Consultation

  • Is your homeschool teacher an employee or independent contractor?
  • Should your homeschool co-op director be paid as an employee?
  • How hard is it to set up a payroll system?
  • What happens if my homeschool group misclassifies a worker? Are their penalties?

Worker classification can be a confusing topic.

My book Paying Workers in a Homeschool Organization can help clear a lot of confusion, but perhaps you want to discuss your particular situation in a private, individual phone consultation.

I offer phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. The phone call will be followed up with an email containing a fact-based determination and information to help you take the next steps.

Click Here to request more information!

Save

Save

Save

Save

Save

Save

Save

Save

Is My Homeschool Co-op Teacher an Employee or Independent Contractor?

Is My Homeschool Co-op Teacher an Employee or Independent Contractor?

Should your homeschool co-op teacher be classified as an employee or an Independent Contractor? What’s the difference and how do you make the decision? Carol Topp, CPA, the HomeschoolCPA, sheds light onto this confusing topic and tells you how she determines if a co-op teacher is an employee or Independent Contractor.

Listen to the podcast

Worker Classification Consultation

  • Is your homeschool teacher an employee or independent contractor?
  • Should your homeschool co-op director be paid as an employee?
  • How hard is it to set up a payroll system?
  • What happens if my homeschool group misclassifies a worker? Are their penalties?

Worker classification can be a confusing topic.

My book Paying Workers in a Homeschool Organization can help clear a lot of confusion, but perhaps you want to discuss your particular situation in a private, individual phone consultation.

I offer phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. The phone call will be followed up with an email containing a fact-based determination and information to help you take the next steps.

Click Here to request more information!

Save

Save

Save

Save

Save

Save

Save

Save

Understanding Taxes for a small homeschool business

It’s tax season and I’ve been getting several emails from homeschool business owners, especially Classical Conversations directors, about how to fill out their tax returns.

The IRS has a terrific website called Understanding Taxes that explains how to fill out a simple business tax return.

It’s quite good. I’ve used their simulations when I taught personal finance at my homeschool co-op

Visit these websites to learn how to fill out your Schedule C Business Income and Loss.

Understanding Taxes home page

Simulation of filing a simple business tax return using Schedule C-EZ

Simulation of filing a simple business tax return with a 1099-MISC (this simulation would be helpful for a Classical Conversation tutor who receives a 1099-MISC).

 

You could also try searching Youtube for helpful videos on preparing a business tax return. Here’s one I found:
How to Fill Out Schedule C for Business Taxes He goes over the Schedule C line by line in about 20 minutes.

 

I hope that helps,

Carol Topp, CPA

Save

Save

What Homeschool Leaders Don’t Know About Fundraisers

What Homeschool Leaders Don’t Know About Fundraisers

Carol Topp, CPA, the HomeschoolCPA will share tips on important issues that homeschool leaders may not know about. This episode will focus on helping homeschool leaders know the tax rules about fundraisers.

Listen to the podcast

 

MONEY MANAGEMENT FOR HOMESCHOOL ORGANIZATIONS:  A GUIDE FOR TREASURERS 

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

Save

Can my landlord get a tax deduction for the free rent he gives us?

I have a few questions for you about a tax deduction for our “landlord.” We just received 501(c)(3) tax exempt status form the IRS. Does this mean that our landlord can claim a deduction the reduced rent she gave us?  RW

 

Dear RW,

Donations of cash or physical goods to your organization are tax deductible charitable donations.  But donations of services or use of leased property is not a tax deduction.

If your landlord gave your homeschool organization free or reduced rent, that is not a tax deductible donation for the landlord. Sorry.

Here are some articles that explain the IRS rules on donating leased space.
Can landlords take a tax-deduction for the donation of leased space?

When a property owner transfers title to a charity of all or part of real property, the owner can generally take a tax deduction for the gift.  However, offering a charity leased space for free or at a reduced rate is a not a gift of an ownership interest and is not considered deductible by the IRS.

Landlords do a good deed by donating leased space to a charity but they are not permitted to receive a tax benefit for their action.

Tax treatment of the provision of rent free

For this reason, donations of services or loans of property to a charity do not qualify as gifts because they do not transfer a property interest to the charity. They simply allow the charity to use the property of the donor, or to benefit from the donor’s services, free of charge.

Here’s the official word from the IRS from Revenue Ruling 70-477.

“a contribution, made after July 31, 1969, to a charitable organization of the right to use property is treated as a contribution of less than the entire interest in the property and does not give rise to a deduction.”

In other words, if someone donates a building (i.e. “the entire interest in the property” ) to a charity, it is a tax deductible donation. But if the contribution is the right to use the property, then there is no tax deductible donation.

Carol Topp, CPA

What Homeschool Leaders Don’t Know About Worker Classification

 

What Homeschool Leaders Don’t Know About Worker Classification

Carol Topp, CPA, the HomeschoolCPA will share tips on important issues that homeschool leaders may not know about. This episode will focus on worker classification — helping homeschool leaders understand how to classify their workers correctly as employees or independent contractors.

Listen to the podcast

Worker Classification Consultation 

  • Is your homeschool teacher an employee or independent contractor?
  • Should your homeschool co-op director be paid as an employee?
  • How hard is it to set up a payroll system?
  • What happens if my homeschool group misclassifies a worker? Are their penalties?

Worker classification can be a confusing topic.

My book Paying Workers in a Homeschool Organization can help clear a lot of confusion, but perhaps you want to discuss your particular situation in a private, individual phone consultation.

I offer phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. The phone call will be followed up with an email containing a fact-based determination and information to help you take the next steps.

Click Here to request more information!

Save

Save

Save

Save

Tax return for a Classical Conversations homeschool business

We are a new Classical Conversations community set up as a single member LLC. We only had 2 students and so my tutor’s income was below the requirement for filing 1099s. Same for me. However, I saw that I shouldn’t be filing a 1099-MISC for myself. What should I be doing?

And what is considered profit for a CC community?

Esther

 

Thank you for emailing me your question about taxes and your Classical Conversations (CC) business.

As a single member LLC, you are a sole proprietorship and you report your income and expenses from your CC business on a Schedule C Profit or Loss from Business as part of your Form 1040.

All your income from the tuition and fees charged to your customers (i.e. parents) goes on line 1 Gross receipts or sales. In this example the total income is $4,500.

Your payment to your teacher(s) goes on Line 11 Contract Labor.  In this example a total of $2,250 was paid to independent contractors. Other expenses go in the categories listed in Part II of the Schedule C. Other expenses made the total expenses sum to $2,982 as shown on Line 28.

The profit is shown on Line 31> It is calculated  from Gross Income (Line 7 on the form) minus Expenses (Line 28). The profit is what you get to keep (and pay taxes on!) as the business owner. In this example the profit is $1,518. This amount will carried forward to the first page of the Form 1040 to Line 12 Business income or loss.

This Youtube video may help: https://youtu.be/qd5etmtyn9s It’s not specific to homeschooling businesses or Classical Conversations, but it goes over the Schedule C line-by-line in about 20 minutes.

P.S. I am no longer taxing new tax clients, so I recommend you find a local CPA to help you in preparing your tax return. To find a local CPA or accountant I recommend you try Dave Ramsey’s Endorsed Local Providers and Quickbooks Proadvisors. A lot of CPAs and accountants listed on these sites specialize in small businesses.

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

Save

Save

Save

Save

Save

Save

Save

What Homeschool Leaders Don’t Know About Losing Tax Exempt Status

What Homeschool Leaders Don’t Know About Losing Tax Exempt Status

Carol Topp, CPA, the HomeschoolCPA will share tips on important issues that homeschool leaders may not know about. This episode will focus on helping homeschool leaders know what to do if their organization has lost its tax exempt status.

Listen to the podcast

Does your homeschool group need to pay taxes?

Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

Click Here to request more information!

Save

Save