Are discounts to homeschool board members taxable compensation?

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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?

Melissa

 

Melissa,

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?

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Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

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Carol Topp, CPA

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Homeschool Leadership is Like Marriage Part 1 (podcast)

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Leading a homeschool organization can be a lot like marriage. They both take time, money, and sacrifice, but can be hugely rewarding.

Join Carol Topp as she addresses a group of homeschool leaders to encourages them in the important work they are doing, but also reminds them not to try and meet everyone’s expectations.

Listen to the podcast

For more help in running a homeschool organization check out Carol’s website, HomeschoolCPA.com where you can purchase her book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out

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Facebook party for homeschool leaders!

I’m looking forward to joining homeschool leaders in Williamsburg, VA for the Home Educators Association of Virginia Leadership Conference March 13-14, 2015.

But first I get to meet these leaders online at a Facebook Party!

What: Facebook Party for Virginia homeschool leaders

Who:  The sponsor is Home Educator Association of Virginia

When: Tuesday, January 27, 2015 at 8-9 p.m. ET

Where: https://www.facebook.com/groups/HEAVLeaderSupport/

At the Facebook Party I will share about the topics I will discuss at the Leadership Conference

Homeschool Leadership is Like Marriage—Know What You’re Getting Into!

Who’s Afraid of the Big, Bad IRS? How the IRS Sees Homeschool Organizations

Top(p) Ten Tips for Running a Homeschool Organization

There will also be time for questions from leaders.

See you on Facebook and maybe in Williamsburg, too!

Carol Topp, CPA

Ask your board these question to spark discussion and planning

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Does you homeschool organization’s board meeting always seem to focus on minor details and irritations? Do you lack direction and forward thinking?

Nonprofit guru TomOkarma shares some great ideas for you board members in  Board Presidents That Don’t Bore

He recommends taking 10 minutes at the beginning of your next board meeting and asked questions like:

  • If we were starting up our organization today brand new, what would it look like?
  • Would we recreate what we have now, or create something that looks different?
  • Say we just came off the most successful year we ever had from programming, fund development and organizational standpoints. What key steps or decisions did the board make resulting in these great results?
  • If we could do one thing right now that would improve our organization (whether internally or externally in our service delivery) and neither time nor money was an issue, what would that be?
  • Ask each member to explain your organization’s history, mission, and programs. It will be a good test!
  •  Pretend it was the worst year ever – what happened and how do we right the ship?
  • How about using the approach “Here’s what the organization is trying to achieve. In the past, it has achieved “A”, “B” and “C” in this way. It has not been able to achieve “D”, “E” and “F”. What do you think we should do in order to achieve these things?

Those ought to generate some discussion! You may have to set a timer to stop the idea flow and get down to business!

Or set aside an evening or a weekend to organize a board retreat and discuss these questions.

HS Co-ops Cover_400If you don’t have a board, make that a goal. My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will help you find members to help you lead your group.

And later in 2015 I hope to offer a new resource to help you motivate every member of your homeschool organization…details to come!

 

Carol Topp, CPA

 

3 essential tools for homeschool leaders

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At the Indiana Association of Home Educators 2014 conference, I spoke to homeschool leaders about

Tips and Traps for Homeschool Leaders

In this video I discuss the 3 essential tools that homeschool leaders need.

In the video I mentioned a handout. You can download it here: http://wp.me/aF6pa-1c4

I hope the video is helpful.
For other videos for homeschool leaders visit HomeschoolCPA.com/Videos

 

Carol Topp, CPA

HomeschoolCPA.com

3 traps homeschool leaders need to avoid

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At the Indiana Association of Home Educators 2014 conference, I spoke to homeschool leaders about

Tips and Traps for Homeschool Leaders

In this video I discuss the 3 traps the homeschool leaders need to avoid.

In the video I mentioned a handout. You can download it here: http://wp.me/aF6pa-1c4

I hope the video is helpful.
For other videos for homeschool leaders visit HomeschoolCPA.com/Videos

 

Carol Topp, CPA

HomeschoolCPA.com

Podcasts for homeschool leaders

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I started my podcast, the Dollars and Sense Show about a year ago! It’s hard to believe its a year old already!

I have a few podcasts that are for homeschool leaders:

Starting a nonprofit homeschool group correctly

Starting a homeschool group correctly.

What is tax exempt status and how do I get it for my homeschool group?

Paying workers in a homeschool organization Part 1

Paying workers in a homeschool organization Part 2

 Advice from experienced homeschool parents

 

 

I plan more for the next few months including

  •  Easy fund raisers for homeschool groups
  • Do you know about required IRS filings for homeschool organizations?
  • Has your group lost its tax exempt status?

 

What your you like to hear about? Drop a note in the comments and I may use your idea for a future podcast.

 

If you find any of my podcasts helpful, please leave a review on iTunes. (click on “View in iTunes” to leave a review)

How to leave a review on iTunes

 

Thank you!

Carol Topp

Starting a nonprofit homeschool group correctly. Dollars and Sense Show # 5 – See more at: http://ultimateradioshow.com/show-hosts/dollars-sense/#sthash.OArruFN6.dpuf
Starting a nonprofit homeschool group correctly. Dollars and Sense Show # 5 – See more at: http://ultimateradioshow.com/show-hosts/dollars-sense/#sthash.OArruFN6.dpuf

3 Tools for Running a Successful Homeschool Co-op (video)

Are you in a homeschool co-op or thinking about leading one? I have some advice for you! (I even write a book about homeschool co-ops!).

Here’s a video clip from my recent presentation of Homeschool Co-ops Are Like Marriage: Know What You’re Getting Into given at the Midwest Great Homeschool Convention in 2014.

Part 5 is titled 3 Tools for Running a Successful Homeschool Co-op.

In the video I mentioned my book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out.

Here’s a handout for the presentation.

More clips from this presentation can be found at HomeschoolCPA’s YouTube Channel.

 

Carol Topp, CPA

Church is worried about legal status of homeschool group

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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.

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

I hope that helps.

Carol Topp, CPA

Pinterest board helps homeschool leaders

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HomeschoolCPA has a Pinterest board called Helps for Homeschool Leaders.

 

On it you’ll find links to

  • blog posts to help you lead your homeschool organizations’
  • podcasts for homeschool leaders
  • inspiring quotes
  • other pins you might find useful.

Check it out, follow me on Pinterest and pin something to your boards too.