My homeschool group gives a fee waiver of our dues to our board officers. Would that discount be reported to our officers as taxable compensation?
This is an excellent question because I’ve encouraged homeschool groups to offer discounts on membership fees to their volunteers or board members as a way to show appreciation.
The IRS defines compensation as:
compensation includes salary or wages, deferred compensation, retirement benefits…, fringe benefits (personal vehicle, meals, lodging, personal and family educational benefits, low interest loans, payment of personal travel, entertainment, or other expenses, athletic or country club membership, and personal use of your property), and bonuses.[i] (emphasis added)
[i] Instructions for Form 1023 https://www.irs.gov/instructions/i1023/ch02.html#d0e1909
So free or reduced fees that are educational benefits is taxable compensation to your board members.
So here’s my advice:
- Keep your fee waivers to board members small and insignificant. The IRS does state that insignificant benefits to volunteers is not taxable income.
- Consider showing appreciation with noncash gifts such as food, chocolate, or flowers. Buy resources to make their jobs easier including helpful books, hiring a payroll company (your treasurer will love it!), accounting software, etc.
- Have the amount of fee waivers decided by a separate, independent committee or put it to the vote of the full membership. The board should not vote themselves a fee waiver. Its a conflict of interest.
- Add a provision to your bylaws allowing a small fee waiver (or tuition discount) to board members or other volunteers. Consider granting a percentage discount instead of a dollar amount such as 20% off the fee.
Have more questions about compensation to board members in your homeschool organization?
Paying Workers in a Homeschool Organization-2nd edition
Carol Topp, CPA