IRS starts revoking tax exempt status May 17

IRS
Homeschool leaders, if your organization has 501c3 tax exempt status be sure to file your annual Form 990N, 990 EZ or 990 or risk losing your tax exempt status. The IRS is beginning automatic revocation of tax exempt status May 17, 2010.

Hundreds of thousands of small non-profits, from Little League teams to community soup kitchens, could lose their tax-exempt status on Monday because of an IRS filing requirement.

The 2006 Pension Protection Act included a provision requiring all non-profits to file an annual return with the IRS.

Previously, non-profits with annual revenue of less than $25,000 were excluded. Non-profits that fail to file a return for three consecutive years lose their tax-exempt status. On May 17, the three-year clock runs out for non-profits that haven’t filed a return since 2007.

The Urban Institute estimates that up to 365,000 non-profits could lose their tax-exempt status if they fail to file by Monday. Groups that miss the deadline will have to apply for a new exemption and pay a user fee of up to $850. They could also be liable for taxes on any revenue earned before their exemption is renewed.

The requirement does not apply to churches or church-related operations.

Non-profits with less than $25,000 in annual revenue can file a 990-N, an abbreviated online form. Completing the online form takes less than 10 minutes, says Tim Delaney, president of the National Council of Nonprofits.

What should you do if your organization loses its tax exempt status?  The IRS says you will need to reapply for tax exempt status.

The IRS as a FAQ page.

And I can help.  I assist homeschool organizations with tax exempt applications.  See my Services page for details.

Carol Topp, CPA

Insurance for homeschool sports

Thanks to homeschool leader Kathi S from PA who told me about insurance for her homeschool group’s sports activities.

The Amateur Athletic Union (AAU) is one of the largest, non-profit, volunteer, sports organizations in the United States. A multi-sport organization, the AAU is dedicated exclusively to the promotion and development of amateur sports and physical fitness programs.

From their website page on insurance:

It can be extremely difficult and expensive to obtain insurance coverage for individual amateur athletic competitions. Yet if insurance is not obtained, the personal assets of the individuals conducting the event may be at risk. Many owners of sports facilities, especially municipalities and schools, will not permit the use of their property or facilities unless it can be demonstrated that both they and the entity/individuals conducting the event are covered under an insurance policy. Without insurance, the opportunity for amateur athletes to compete in organized sports programs is substantially limited.

Kathy’s homeschool organization pays only $12 a year for each student to participate in a volleyball club they offer.  That seems very affordable to me!

Read more here:http://www.aausports.org/Insurance/Overview.aspx

This may bring a lot of piece of mind to homeschool leaders running sports programs.

Carol Topp, CPA

Related article: Insurance for Hoemschool Groups

Fundraising success story

BlueDollarMarching

I know that a lot of homeschool groups follow in the footsteps of other nonprofit organizations when it comes to fund raising.  They sell the same things and they even succumb to the pressure to set up individual fund raising accounts and “reward” those who do the most work.

I discourage setting up individual fund raising accounts and I have written about them here:

The IRS’s Word on Fundraising Do’s and Don’ts

Individual fundraisers and homeschool groups

I have a great story to share with you about one homeschool leader that did her fund raising right and it benefited many people:

Hi Carol,

I have to tell you that since reading your comment on my homeschool blog last week I spent some time perusing your advice on Fundraisers. I am a candlemaker who runs fundraisers, originally for young people raising money for mission trips and this year for a Homeschool organization who wanted to partially subsidize the Formal. These tickets are so often cost prohibitive…Anyway…as we began the process I had several parents come to me and basically plead for the money to be designated to those who sold the most. Without knowing that it would have been legally wrong, I felt that it was just a bad idea and said that I believed the right encouragements and positive input would bring a good result for all. I was right! The class did well and was able to drastically reduce the ticket prices for all.

Thanks for the legal back-up in case this comes up again in the future. I will gladly refer anyone to your website.

Keep up the great work!

Becky K.

I was so glad to hear that Becky did the right thing and the entire class was blesses by the fundraiser, not just a few families. I love the spirit of cooperation and teamwork!

Carol Topp, CPA

Ultimate Homeschool Expo

I am happy to be one of the invited speakers for the 2010 Ultimate Homeschool Expo. This is on on-line homeschool convention.
  • Online Seminars with With 35+ Speakers! (I’m one of them!)
  • Virtual Vendor Hall! (I have a virtual booth there)
  • Free Gifts–ebooks, audios, downloads! (I’m giving away ebooks, audios and chapters form  my books)
  • Special offers from your favorite Online Vendors!
  • Mp3 Downloads for all audios (over $1,000 in workshops!)
One of the neat things about the Ultimate Homeschool Expo is that everything is ONLINE indefinitely. The Expo officially starts Monday May 3, 2010 but it lasts forever!
The host, Cindy Rushton, builds a private, exclusive membership site that includes everything from the UHSE in one place–it has audios (from all of the sessions and from the bonus gifts that the speakers give), ebooks, complete unit study guides, articles, printable notebooking pages, cookbooks, on and on.
All for only $39.95.

My workshops include:
Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out
Is Your Homeschool Groups Ready for 501(c)(3)Tax Exempt Status?
Micro Business for Teens: Starting a Micro Business

I also have a virtual vendor’s booth where I will be giving away the following prizes:
  • Chapter excerpt from Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out on Avoiding Burn Out for homeschool leaders
  • Chapter excerpt from Tax Exempt 501(3)(3) Status for Homeschool Organizations on Nonprofit Incorporation: When Should a Homeschool Organization Consider It?
  • Chapter Excerpt from Micro Business For Teens: Starting a Micro Business on Getting an Idea: A Collection of Micro Business Ideas Best for Teenagers
You will receive my workshops (on audio) and prizes and access all of the wonderful resources by purchasing a ticket to the Ultimate Homeschool Expo. See what is offered and buy your ticket here:

Ultimate Homeschool Expo 2010 Ticket

Carol Topp

HomeschoolCPA.com

A lesson in leadership from Moses

The Ten Commandments was on last night.  It’s a great film, but it ends too early with the Israelites leaving slavery in Egypt.  There are a lot of wonderful stories about their life after Egypt and one in particular is a great lesson in leadership from Moses.

My friends Kristen and Denise from HomeschoolGroupLeader did an interview with me recently about what we as homeschool leaders can learn from Moses.

HGL:
What is the TOP way you’ve discovered that homeschool group leaders can avoid burning out?

Carol:
I think the best way is to learn from other leaders.

We’ve got a great example in the Old Testament of the leader Moses. What Moses failed to do was to delegate responsibility. So, the first way to avoid burnout is to get help.

What Moses was guilty of doing was sitting around all day basically listening to everyone’s complaints and dealing with them all himself. His father-in-law came out there into the desert where Moses was leading the Israelites, saw what he was doing and said, “What you’re doing is not good. You will wear yourself out. The work is too heavy for you. You cannot handle it alone.” He goes on to suggest a plan to Moses of how to delegate responsibility to trusted leaders and then they can entrust it down a level, too.

We should be following that Biblical model of leadership. It’s almost unbibilical for a leader to think, “I have to do this all myself.” That comes from pride. Sometimes it comes from a perfectionist tendency, and sometimes it comes because they can’t get any help. I know, of course, your book helps a lot with motivating members to help, but we also have to make sure that the leader doesn’t have the improper attitude of thinking, “I have to do this all myself or this is the only right way to do it.” That’s probably what Moses thought: “There’s only one way to do it—my way.” And he was corrected in that and we need to follow his example of getting help and delegating responsibility.

(the full interview can be found at http://hgleaderblog.blogspot.com/2010/02/wednesdays-wisdom-lesson-from-moses.html

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.