IRS auditors crackdown on independent contractors

IRS

According to CNNMoney, the IRS is going to do random audits of 6,000 companies that use independent contractors.

CNN Money: Auditors Crackdown on Indedendent Contractors

Homeschool organizations might be caught in the web if they are paying teachers as independent contractors.

Here’s what the article states:

(CNNMoney.com) — If your business uses independent contractors, get ready for new scrutiny. Hoping to boost tax revenue, the IRS and many state governments are cracking down on how companies classify their workers.

When employers report wages for independent contractors on IRS form 1099, rather than a W-2, they aren’t required to pay unemployment insurance, worker’s compensation insurance or payroll taxes for them. But the rules governing which workers are genuinely “independent” are strict — and often flouted.

The Internal Revenue Service launched a program last month that will randomly examine 6,000 companies over the next three years for employee misclassifications. The federal government estimates it will raise $7 billion over the next 10 through tighter enforcement.

Should you as a homeschool leader be concerned? Probably, if your organization has been paying people as independent contractors when they are really employees. How can you tell the difference?

I can help.

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 employees 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.

To request a consultation, please contact me. I’m happy to help and relieve any anxiety you have about this confusing topic.

Carol Topp, CPA

 

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Homeschool co-ops come in many sizes

Homeschool mother Beth at Learning Together blog discusses at least five different homeschool co-ops that she has been a part of.  Five co-ops! Does that sound overwhelming to you? It might be until you read Beth’s descriptions.  Many of the co-ops were very short term or very small with just a few families meeting in a home.

Multi-family Enrichment Co-op

This Co-op met for 8 weeks in the fall, and then met again in the spring with a new set of classes. It was a wonderful experience, exposing my children to a variety of skills and subjects that I might not have attempted – and lots of friendships were planted there.

Multi-Family Curriculum-based Co-op
A little over three years ago a group of friends met together to discuss starting a weekly Co-op based on the Tapestry of Grace curriculum. This Co-op started out with 13 families but has now grown to 18 families, and meets every Friday from 9:30 – 2:30 at a local church where we rent classroom space.

Yearlong Academic Co-op
I have done yearlong science co-ops with both my elementary and middle school kids. When Sarah was in 8th grade and Eric was in 6th, we did Apologia General Science. To keep us moving along and to make things a little more fun, we met with one other family every other Friday to do the experiments together.

Small Multi-Subject Co-op
Those co-op experiences led me to pursue even more similar situations, as I saw lots of good things happening both for me and for my children. A friend and I decided to get our 2 girls together twice a week for writing and Latin – I taught writing and the other mom taught Latin.

Short-term Co-ops
Years ago, when my oldest daughter was really into the American Girl books, I hosted an American Girl co-op at my house, which met once a week for 10 weeks. We read the books of one of the American Girl series.

HomeschoolCo-opsCo-ops can come in all shapes and sizes.  If you cannot find a co-op in your area that meets your needs, why not start your own?  My book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn out can get you started.

It is available at Amazon, BN.com and other on-line retailers.

Read more here.


Are You Burning Out?

Kristen and Denise of Homeschool Group Leader recently interviewed me about leader burnout.

They are currently running a series at their blog on burnout with a new topic each Wednesday.

Here is the first portion of the interview:

What a great time we had interviewing author and Homeschool CPA, Carol Topp! She shared a bundle of hand-picked truths from her super-helpful book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out. With knowledge and insight, Carol explained the warning signs of leader burn out and how to avoid it.

Do you feel like you might be burning out? Is homeschool group leadership overwhelming you? Have you noticed another leader’s fire seems to be fizzling out? How would you know?

HGL: From your experience, how can a leader know when he or she is burning out?

Carol Topp: It is important to recognize burn-out before it causes damage to you, your family or your homeschool group. Here are some symptoms of burn-out:

* loss of enthusiasm
* negativity
* depression
* health problems
* neglecting your own children
* neglecting your husband
* irritability
* feeling like a failure
* losing joy in serving

If you have 4-5 of any of these symptoms, you are experiencing burn-out.

This simple list can enlighten the path ahead so that leaders can take action and be completely healthy.

Kristen & Denise will make the complete interview available to you as soon as possible. Until then, you can read more of the interview at Homeschool Group Leader blog as they post excerpts from my interview each Wednesday. Soon the complete interview will be available in two reasonably-priced formats—audio cd and word-for-word transcript!

Can’t wait? Need help now?

My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out has an entire chapter devoted to burn out.  Actually the whole book offers suggestions on how to delegate and avoid burn out. It is available from Amazon.com.

Read a sample chapter here.

Order here.

onebyoneCoverKristen and Denise have a terrific book One By One: The Homeschool Group Leader’s Guide to Motivating Your Members. It is an ebook and available for immediate download.
Click Here!

Paying Workers workshop now available

Homeschool leader, did you pay a volunteer, teacher, leader or worker for your homeschool organization in 2009? HomeschoolCPA< Carol Topp,  recorded her on-line workshop for homeschool leaders.  Just in time for tax season.

Paying Workers in a Homeschool Organization

was recorded on

Friday, January 15, 2010

and is now available for you!

or listen at the Talkshoe site here: HomeschoolCPA’s Workshops

Topics:

  • Volunteers. Can you pay a volunteer? How to reward volunteers.
  • Independent Contractors. What are they? What IRS forms need to be filed?
  • Employees? How are they different from Independent Contractors? What forms does the IRS require?

The workshop runs for one hour.

Look for more upcoming online workshops. Sign up for my newsletter to be informed of the next date and topic.

Carol Topp, CPA

Do homeschool teachers get the Educators Expense deduction?

IRS

I am frequently, “Are there any tax breaks for homeschooling parents?”  My usual reply is, “No; there are no tax credits or deductions for homeschool expenses at the federal level.” There are tax breaks offered by some states that I discuss in another blog post.

But here’s a bit of a new twist on the question from a homeschool mother.

I spoke with an IRS representative just today about an educator’s expense tax break.
The IRS rep stated that IRS laws specifically prohibit homeschoolers from getting up to $250 credit for educational items purchased. However, he stated congressional law overrides IRS law and that congressional law requires teachers work in a school as defined by state law. In our home state, Kentucky, we are considered private schools. The IRS rep suggested I give the credit a go next year but be prepared for an audit. Can you shed some light on the situation?

She is referring to the Educators Expense deduction of up to $250 in unreimbursed expenses.

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 (to the IRS, not to all of us SAHMs!).  Homeschool parents are not employees of a school.  We do not get paid; we do not get a W-2.  I attended a tax workshop where we were told that 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 intention of the tax deduction was to move the deduction from the Schedule A (Itemized deductions) Miscellaneous Deductions where it was subject to a 2% of Adjusted Gross Income limit (meaning anything over 2% of your AGI could be deducted) and put the deduction on the front page of the 1040, so even teachers who don’t itemize deductions can take advantage of the $250 deduction.

The Educator Expense Deduction was nearly eliminated in 2006, but received an extension.  I predict the deduction will not be around for much longer.  IMHO, it was President Bush’s attempt to get a few votes from paid teachers.

So in short, I do not take the Educators Expense deduction, nor recommend that other homeschool families take the deduction.  The IRS rep was right, be prepared for an audit.  But without a W-2 from a school, you won’t win.

HTH,
Carol

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.

Bank account for your family homeschool

BankXSmall

This homeschooling mother in NC ran into a problem when she tried to open a bank account for her family homeschool.

I live in North Carolina, homeschool my children and want to do some fund raising for some projects and field trips and also school supplies.

I went to the bank, wanting to open an account in the homeschool’s name and they said that I would have to open up an account in my name doing business as my homeschool’s name.

My question to you is, how do I go about paying taxes on the money? I do not want to get into trouble with the IRS. Was that the right thing for me to have done? Waiting to hear from you soon!
Kim

Dear Kim,

I’ve been asked questions like yours before. I answered them in two posts on my blog.

Can we (an individual homeschool) be allowed to do fund raising similar to youth sports groups, scouts,etc?

Yes, you can participate in a fund raiser if the fund raising organization allows it. BUT, the profit you make is taxable income and you’ll need to report it on your tax return.

Can my individual homeschool have a fundraiser?

Individual fundraisers and homeschool groups

I hope that answers your question; let me know if it doesn’t.

Carol Topp, CPA

13 Reasons Not To Join Our Co-op

My guest blogger today is Carren Joye, leader of the Academy Days Homeschool Co-op in Alabama. She shares a great article on when you are not ready to be part of a homeschool co-op.

13 Reasons Not To Join Our Co-op

Homeschool co-ops are not for every homeschooling family, and we certainly do not expect our co-op to necessarily be perfect for your family. As a matter of fact, we would rather you determine that our co-op is not a good “fit” before you make the commitment to participate for a full 14-week semester. The following 13 reasons why you may not want to join our co-op are based on feedback from former members for whom our co-op did not work out.

If you experience any of these situations, please, please, please do not join our co-op!

1. If you have a full time job or a busy extracurricular schedule and already have limited days for “book learning” at home, then you will find co-op way too time-consuming. Co-op takes a full day out of your week because you must be at co-op if your child is there. You certainly do not have to teach, but you can serve as a class helper or co-teacher or on the clean-up crew for part of the day. Our co-op is truly a “cooperative” effort, so we rely on everyone to make it work successfully, and we expect members to honor their commitment when they join. If you already don’t have time for co-op, don’t sign up!

2. If you are moving or will move this year, or if you have health problems or family obligations to help parents or other relatives, focus on those priorities first until this season of your life has passed. Do not add more stress to your life by committing your family’s precious time and energy to our co-op. If you and your children will not be able to meet your weekly obligations, you will let yourself, your family and the co-op down.

3. If you already know that you may miss three Thursdays per semester, please do not join our co-op as you and your children will already miss a full quarter of classes — and that’s before illnesses! Of course, we understand that illnesses and emergencies occur unexpectedly (and we do not want you to attend if you are sick), but we also respect the time and effort that facilitators put into their classes each week. They deserve the mutual respect of having students be in class and on time, barring unforeseen situations and illnesses. We ask parents to honor their commitment and make punctual attendance a priority.

4. If this is your first year homeschooling, you really need to take a year to adjust and find out what style works best for your family. Co-op is not a substitute or alternative to schooling at home. Indeed, jumping right into a co-op before adjusting to homeschooling may overwhelm you and your children.

5. Similarly, if you are joining co-op as a substitute for school or so you won’t have to teach your children at home, then co-op will not meet your needs. The parent is still the primary teacher for classes taught at co-op because the parent knows her children better than any teacher ever could. While our classes are designed to provide students with specialized instruction, co-op classes do not absolve parents from their responsibility for their children’s education. Parents still must ensure that their students keep up with homework, and they may need to assign supplemental coursework at home. Additionally, parents administer tests at home and determine final grades.

piccwhand6. If you homeschool because your child could not learn in a classroom environment or if your child does not do well in a group setting, you probably will not be pleased with our co-op. Although classes typically range between 4 and 10 students, as with the creative writing class pictured at right, we still group students by grade/age and expect “classroom manners” — although, since most are lifetime homeschoolers, they don’t always know to raise their hands! Also, whiteboards, tables and chairs make our classrooms very efficient for teaching a class, but give the classes a bit of a school-like feel — however, with homeschoolers as teachers, our class activities are usually more out-of-the-box! Additionally, with even a small group of families, we must rely on some rules and guidelines to maintain order and efficiency. If you unschool, you and your child may not feel comfortable even in our relaxed setting.

7. If you homeschool because you feel no one else can adequately teach your child what he needs to know in any given subject, you will not be satisfied with any parent who teaches a specialized co-op class. If you join our co-op, accept that others may not teach a subject the way you would and relinquish some control. At home, focus on subjects not taught at co-op to maximize your time. Alternatively, accept that you will be supplementing at home to a certain extent. If you’re not okay with either option, you should not join a co-op at all.

picscikatie8. If you are joining co-op for purely socialization reasons, you will likely find the classes too academic. All high school classes and most junior high classes require homework. Also, a few classes, such as the Apologia sciences pictured at right, require lessons at home during winter break in order to finish the course in one year. Even kindergarten and elementary classes have lessons incorporated into their activities and games. Also, while our children see each other at other homeschool events and clubs, our co-op does not schedule field trips or clubs. You would do better to join one of the many local homeschool support groups for socialization opportunities.

9. If you are joining co-op for rigorous, college-prep courses, you may find the classes not challenging enough. Unlike some co-ops, we do not administer tests nor do we assign grades. The parents remain the primary teachers of their own children. Kindergarten and elementary classes have neither homework nor lesson plans to follow at home. However, while most high school courses are college-prep, a weekly class for only 14 weeks cannot possibly cover all there is to know in a particular subject. Depending on the subject, you may want to supplement at home by assigning extra books or research.

10. If your junior high or high school students already have a full load of schoolwork at home or are members of another co-op, our classes may interfere with their ability to complete their schoolwork. Please focus on one co-op at a time.

11. If you have babies and toddlers in your family, you may want to wait until they are a little older. Although we do maintain a small nursery, the co-op may interrupt their feedings and nap schedule. Plus, little ones usually get sick more frequently than older children, which could cause your family to miss a lot more of co-op than you want.

12. If your child is undergoing obedience issues or social or behavioral problems, this is not a good time to join co-op.
Focus on the character growth of your child before putting him in a situation for which he may not be ready. This applies to all children, whether preschool, kindergarten, elementary, or high school!

13. If you are on a tight budget or live a good distance from our location, you may not want to make the financial investment. Class fees are minimal (between $1 and $15 for all 14 weeks) and cover supplies only, but fees do add up for a large family. Also, gas prices may be prohibitive if you live a considerable distance from Grace Community Church in Millbrook.

No co-op will fit every family. Before joining our co-op, or any homeschool co-op for that matter, you should consider what the Lord may have planned for your family this year. Ask yourself if participating in a co-op right now would enhance or exhaust your family at this season of your lives. Also, examine your reasons for joining a co-op. Consider what you expect from participating in this co-op, and ask other members if this co-op will likely meet those expectations. If not, don’t worry. You definitely do not need a co-op to homeschool successfully!
About the Author:
Carren W. Joye is the author of Homeschooling More Than One Child: A Practical Guide for Families (ISBN 0-595-34259-0), Alabama State History Curriculum for grades K-9, and A Stay-at-Home Mom’s Complete Guide to Playgroups (ISBN 0-595-14684-8). A homeschooling mom of four children, she has founded four successful playgroups, a homeschool support group, homeschool covering, and homeschool co-op. For more information on her books and state history curriculum, visit her web site at www.carrenjoye.com.

Preschool homeschool co-op

Angie at the Homeschool Classroom has a great post about starting a homeschool preschool co-op.

Starting a Homeschool Preschool Co-op

Although many parents come to homeschooling after their children have already spent years in a public or private school, there are also many parents who begin thinking of homeschooling before their children have even been born.  Still others come to their interest in homeschooling when the preschool years hit.

In our society, preschool has become the norm for so many. It seems as soon as a child is three or four, people start asking, “Are they going to preschool?”  Although all of my children did at least some preschool outside of the home, this is a perfect age for the homeschooling experience.  Still — some families long for the opportunities that an outside preschool has to offer, even though they long to homeschool.

For those families wanting the best of both worlds, a homeschool preschool co-op might be the perfect solution.

What is a homeschool preschool co-op?

A homeschool preschool co-op will look different from group to group.  However, the basic idea is that it will be a small group of parents (typically mothers) and preschool aged children who meet for preschool together.

Angie’s post goes on to share some great tips on getting started. Read the rest here

My book,  Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out, can also be a great place to get started in launching a preschool co-op. Read a sample chapter Your First Planning Meeting at HomeschoolCo-ops.com

Here’s a neat idea if you would like to start a preschool homeschool co-op.  The founders call it Joy School and give you activities, music CDs, a schedule and manual. Yes, there are fees involved, but it might be worth it and is definitely cheaper than a commercial preschool.

Carol Topp, CPA

Have trouble motivating members?

Many homeschoool leaders have trouble motivating their members to attend events, pitch in and help lead activities or step up to leadership roles.

How can you motivate members?

Kristen & Denise of Homeschool Group Leader blog have written an ebook, One by One: The Homeschool Group Leader’s Guide to Motivating Your Members.

Order Here!

Homeschool group leaders often ask, “How we can we motivate our members to get more involved?” and worry about getting more members to volunteer and share in the workload. Veteran homeschool leaders, Kristen Fagala and Denise Hyde of Homeschool Group Leader, take that question head-on in their idea-packed e-guide, One By One: The Homeschool Group Leader’s Guide to Motivating Your Members. With clear illustrations and timeless principles pulled directly from Scripture, this 80 plus-page e-guide lays out a feast of practical how-to’s for leaders to apply right now.
There are no cookie-cutter members, therefore there is no cookie-cutter way of motivating each one. The good news is that there are tried-and-true motivators that can be applied easily and successfully to each unique situation and member. Whether leaders live in the high desert or in the bustling city, they can motivate each and every member of their group from apathy to action with this e-guide for leadership success. Order your copy of One By One today and start gaining confidence, happy volunteers, and active members.

I was able to get a preview copy and here’s what I think about the book:

One by One is a book that every homeschool leader needs, but does not realize the need until it is too late!  Every leader has difficulty motivating members or getting volunteers, but they only ask for help when it’s too late and they are tired, frustrated and want to quit!  Instead, leaders should read Kristen and Denise’s very practical and encouraging book.

Inside you will find the three secrets to successfully motivating every member and then practical, real-life ways to apply those skills to everyone from moms to teenagers. I especially appreciated the true stories of how Kristen & Denise implemented everything they suggest.  They know their stuff and have a heart to share what they know with others. Take some of the advice, share it with your fellow leaders, apply it and you will find happier members, a more relaxed leader and a successful group!

Sound like something that you could use?  Well, Kristen & Denise are offering a great deal on their ebook.

It is available for three days (Nov 25-27 includes Thanksgiving Day and Black Friday) for the sale price of $19,

then $24 for the next three days (Nov 28-30).

After the six days, starting December 1st, the e-book will be available at it’s regular price of $29.

Order Here!

Carol Topp, CPA

13 benefits of homeschool co-ops

Heart of the Matter has a great article written by Katie Kubesh on the benefits of homeschooling with co-ops.  She surveyed several co-ops members and here is what the received by being in a homeschool co-op:

  1. Kids enjoy the variety of resources and materials provided
  2. Parents do not have to do as much research and footwork on their own; they are able to share with other co-op parents
  3. Co-ops gives homeschooling families the opportunity to bond with other families in their city or state
  4. Co-ops keep homeschooling families on schedule
  5. Co-ops keep homeschooling families accountable for their studies
  6. The extracurricular activities are fun for both the parents and kids, including football games, craft parties, theme parties, field trips, etc.
  7. People who belong to co-ops sponsored by their church appreciate the opportunity to share their faith and bond with other parish families and the pastors, who sometimes participate also
  8. Co-ops that offer classes or unit studies give students the opportunity to learn a broader range of topics and/or to learn a subject their own parents may not be comfortable teaching, for example higher level mathematics, music, or foreign languages
  9. Students are exposed to different types of teachers
  10. Students are held accountable by someone other than their parents
  11. Parents provide each other with support and encouragement
  12. Students have the opportunity to interact with kids of all ages, not just their grade or age level
  13. People who belong to co-ops have a wide selection of experiences. Some belong to large co-ops that include over 200 families. Larger co-ops are able to teach many classes (one offers 80 different classes from preschool through high school with subjects ranging from science, math, history, art, music, foreign languages, drama, and public speaking) and sponsor many field trips and other activities. Some larger co-ops even offer courses that students earn college credits for.

Isn’t that a great list?  I especially like # 9, 10 & 11  because those are the main benefoits I recieve form my homeschool co-op.

Katie goes on to explain the benefits or large and small co-ops.  Sometimes small co-ops grow into large co-ops and the leaders find themselves managing larger groups of people, in a larger space and handling more money. This website
has a lot of tools to help homeschool leaders including articles, ebooks and audios. My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out can also help a homeschool co-op leader run a successful co-op, whether small, medium or large, without burning out!

Carol Topp, CPA