Can homeschool teachers be allowed to keep extra money as a donation?

Dollarsinhand

Dear Carol,

I have purchased and am reading your ebook Paying Workers in a Homeschool Organization. Thank you for making this available!

We are a co-operative, so all are teachers are basically volunteers. I do, however, collect on their behalf an estimated class contribution to help them cover costs related to teaching: curriculum, printing handouts and lesson plans, consumables used in class etc. This amount is determined by the teacher, usually $5-10 up to $50 per semester depending on the class. These funds are collected and then dispersed to the instructor at the beginning of the semester. We don’t require receipts or an accounting to be submitted. Any remaining funds are considered a “donation” to the teacher to recognize their time and effort in preparing and teaching the class. Teachers are not required refund monies back to the families.

Most of us feel that this structure is reasonable. However, one member is questioning. Does our policy seem acceptable from a legal position?

Thank you, in advance, for taking the time to answer my questions.

God bless your service,
Rose

Rose,

Thank you for your kind words. I’m glad the book was helpful. It’s been updated since you read it and has grown from a 20 page ebook, to a 130-page paperback.

This statement bothers me greatly, “We don’t require receipts or an accounting to be submitted. Any remaining funds are considered a “donation” to the teacher to recognize their time and effort in preparing and teaching the class.”

When you do not request receipts, you are running what the IRS calls an “non-accountable” plan for reimbursements.

The remaining funds that you let your teachers keep is not a donation, it is a payment for services and is taxable income that needs to be reported to the IRS. Actually, the full amount you give to the teachers is taxable income under a non-accountable plan.

I have written a few blog posts on the topic of paying volunteers, requesting receipts for reimbursements, etc. Please read these:

No receipts for expenses can get you in trouble
and
Should my homeschool co-op be giving any tax forms to our teachers?

In my book Money Management in a Homeschool Organization I discuss how to properly set up an accountable reimbursement plan (Chapter 7).

I hope you will change your practices (i.e set up an accountable plan for reimbursements and start requiring receipts) so that your teachers do not have to report their payments as taxable income.

You may also find my updated version of Paying Workers in a Homeschool Organization helpful.

Carol Topp, CPA

 


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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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Homeschool groups ripe for embezzlement

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From the Columbus (OH) Dispatch comes this warning:

Small nonprofits ripe for embezzlement

They’re often diligent, caring workers, and yet tempted by seemingly easy cash.

Working on the inside, thieves can hit school groups, athletic leagues and churches, especially when they’re surrounded by trusting colleagues and loose security.

And according to one expert, because of the disgrace and embarrassment that the crime brings an organization, their transgressions often are not reported.

The median loss to fraud for religious, charitable and social-service organizations was $106,000 last year, according to an annual survey by the Association of Certified Fraud Examiners. “We estimate that organizations lose about 7% of their net worth to fraud each year,” said Scott Patterson, the association’s spokesman.

“There are so many people doing the good work that nobody steps back to say, ‘Should we begin looking at ourselves. We’ve grown. We better put some checks and balances in,'” said Gary Zeune, a fraud expert whose speakers bureau, “The Pros and Cons,” travels the country. “The only people who can steal you blind are those you trust and who don’t have controls.”

Smaller organizations, such as school parent-teacher organizations, are often vulnerable because neighbors and friends are reluctant to offend by suggesting that dishonesty is possible.

“This is typically mothers stealing from their own kids,” Shaw said. “The kids are the shills out there selling cookie dough or doing the walk-a-thon, and the mothers are stealing it.

“If the board is too embarrassed to have checks or balances, they need to have a new board,” she added. “But if you’re an honest person, you shouldn’t be insulted by having a second set of eyes.”

It’s so sad to hear about embezzlement taking place in homeschool groups, but I know from homeschool leaders that it can and does happen!

How can you prevent embezzlement?

Money Mgmt Homeschool

Read Money Management in a Homeschool Organization: A Guide for Treasurers. It  has a helpful list of policies and procedures for your group’s treasurer and your entire board.

Keeping you safe,

Carol Topp, CPA

Teaching Teenagers and Recent Grads About Money (podcast)

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My latest podcast episode is part 2 of a presentation on how to teach kids about managing money. I explain the important lessons to teach high school students and young adults.

Listen here.

This Handout lists helpful resources for teaching teenagers about managing money.

 

This is part 2 of a two-part presentation. Listen to Part 1 .

You might be interested in my 4-part podcast series in teaching kids about money:

Episode 7: Teach Preschoolers About Money

Episode 8: Teach Kids About Money

Episode 9: Teach Pre-Teens About Money

Episode 10: Teach Teenagers About Money

 

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My newest book Career Exploration for Homeschool High School Students is available in print and ebook format. Learn more.

QuickBooks for free to nonprofits

 

Read on update to this offer here.

I recommend you use online accounting software instead of  a desktop version. QuickBooks Online is available for free to qualified 501c3 nonprofit organizations.


Intuit, the makers of QuickBooks, the grand-daddy of accounting software, is offering its 2015 Premiere Nonprofit software package for free* to qualifying nonprofit organizations.

*A $45 Administration fee will be charged, but that’s pretty cheap. QB nonprofit sells for $250+

If eligible, your organization may receive one accounting product per fiscal year (July 1 to June 30).

Consult the eligibility and restrictions page to review your organization’s eligibility to participate in this program.

  • Donated product will be distributed under this program to qualifying organizations only, not to individuals.
  • Organizations may request one accounting product per fiscal year (July 1 to June 30).
  • Only organizations with an annual operating budget of less than $10 million are eligible to receive this donation.
  • This donation is available only to nonprofits with 501(c)(3) designation and to public libraries.

Get your copy of QuickBooks here: http://www.techsoup.org/intuit

 

Cover Money Mgmt HS OrgThe new year is a great time to start using accounting software.

If you need help with record keeping, consult my book, Money Management in a Homeschool Organization

Also consider QuickBooks training with me, Carol Topp. I can set up your Chart of Accounts and walk you through how to send invoices, enter expenses, make deposits and run reports. Contact Carol

 

Carol Topp, CPA

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Could you please give me a minute (and review my books)?

3Homeschoolbooks

Have you benefited from reading any of my books?

Did Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out make starting co-op a little easier?

Did the information in The IRS and Your Homeschool Organization get your organization tax exempt status?

Have you read through the list of practices to avoid embezzlement in Money Management in a Homeschool Organization? (yes, unfortunately, homeschool groups can be a victim of theft)

Could you please leave a short blurb on Amazon? It doesn’t have to be long. Just a sentence saying something like:

Really helpful!

Clear and easy to understand.

Essential for running a homeschool organization.

Here’s the links to make it easy for you.

Homeschool Co-ops book the original edition had 16 reviews, but this new edition has only 5 reviews :(. It needs a boost.

IRS and Your Homeschool Organization book (This book has zero reviews! I really need your help here!)

Money Management in a Homeschool Organization book (This book has zero reviews, too! It really needs some!)

I appreciate your time and effort!

Thank you!

Carol Topp

Scouts don’t allow individual fundraising account (and neither should you!)

BoyScout

 

I am frequently asked questions about fundraisers for homeschool groups, especially about individual fundraising accounts.

What’s in Individual Fundraising Account?

An individual fundraising account is any method by which a nonprofit group credits an individual or family for some or all of the funds raised by that individual or family. Usually, credit is given for sales of products and services at the organization’s fundraising events.

Aren’t IFAs used by a lot of youth organizations?

These IFAs are very common, especially in scouting and  youth sports. In the past, youth organizations followed some simple guidelines  that they thought made the practice of creating IFAs acceptable. Here’s an example of an IFA policy.

I’m a conservative CPA and always discouraged the use of any IFAs. I’m not alone. ParentBooster.com strongly discourages IFAs and Trail Life USA  disallows IFAs for their members.

Boy Scouts discontinuing Individual Fundraising Accounts

And now it appears that the Boy Scouts USA has also changed their policy regarding IFAs. According to BobwhiteBather.com,

Source: http://bobwhiteblather.com/new-policy-prohibits-individual-scout-fundraising-accounts/

… the Boy Scouts of America is beginning to inform units that they may no longer allocate fundraising proceeds to “Scout accounts” for the private use of members to pay their expenses. This goes against a longstanding recommendation that units should use fundraising to allow individual Scouts to pay their own way. The new policy was first found buried in a publication aimed at councils on running effective product sales, which was released late last summer, and most recently appeared in Fiscal Policies and Procedures for BSA Unitsa summary of frequently-asked questions about unit finance.

 

FYI, the Boy Scout document cited above says quite clearly, “Funds raised by the unit from product sales belong to the unit. They may not be transferred to the Scout.”

So, my advice to homeschool organizations is unchanged:

  • Do NOT set up individual fundraising accounts.
  • If you have them now, STOP!
  • If you conduct fundraising, do not record how much each family brought in.
  • Do not have a system where tuition or dues are reduced by the amount of fundraising a family conducts.

You may find your organization can still function quite well, or even better without individual fundraising accounts like Becky’s homeschool group did.

Carol Topp, CPA

More Money Myths Homeschool Moms Believe. Dollars and Sense Show #14

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In this episode of the Dollars and Sense Show host Carol Topp and her guest Susan Raber of AtHomeAndSchool.com discuss more money myths that homeschool moms believe.

Listen to the show here
From Episode #13 of the Dollars and Sense Show, Carol and Susan discussed three money myths:

Myth #1: Just a Little More Money is All I Need…

Myth # 2:  I Need …..

Myth # 3:  It was on sale; I saved a lot of money!

On today’s show, Carol And Susan discuss two more money myths.

Myth # 4: Homeschooling is Expensive:

A study of 220 families spend between $300 and $1,000 per family each year. Private schools cost from $3,000-$10,000 year.  That’s expensive!

Truth:  Homeschooling is time consuming.

“Opportunity cost” is the cost of passing up a choice when making a decision.

Money tip:  Make up a homeschool budget.  Include books, field trips, classes, magazine subscriptions.

 

Myth # 5: I’ll use it someday

Truth:  You don’t know what the future holds

Ask yourself:

  1. Am I going to use it now or in the near future? Beware of buying things with the reasoning, ‘I’m not sure when I’ll use it, but I’ll use it someday.’  Tell yourself, “If it’s that good, it will be there when I need it.  If not, something better will replace it”
  2. Where is it going to go?  Make sure you have a clearly designated space otherwise it increases your clutter.

 

We hope you’ve enjoyed these Five Money Myths and remember them as we enter the homeschool convention shopping season!

 

Tune in for the next Dollars and Sense show on April 24, 2014 when Carol will start a series on tips for teenagers or parents wanting to start a micro business.

 

Money, Taxes and the Homeschool Family

My latest article “Money, Taxes and the Homeschool Family” is in this month’s edition of The Old Schoolhouse magazine.

Read the entire article here

The Old Schoolhouse magazine is  completely online and FREE.

You don’t even have to give your email to read it. How coo is that?

You might want to visit page 34 too!

Carol Topp, CPA

Teach teenagers about money: Dollars and Sense Show # 10

DollarsSenseShow10

In this episode of the  Dollars and Sense Show host Carol Topp discusses teaching your teenagers about money.

Listen to the show here 

Show notes:

Recap: Our motivation to be teaching kids about money:
Other people’s bad examples are all around us, including the US government.
Avoid excessive debt. College debt now exceeds credit card debt.
Someone is watching!
Avoid boomerang kids. We are raising adults, not children

How to Teach
Natural style. As you go about your day. Real life examples.
Get someone else: Sunday school, Scouts, Homeschool co-op
Focused teaching: Family nights, games, books

What to Teach: Teenagers

  • What things cost and what jobs earn.
  • Career exploration. Post high school education.
  • Checking accounts and financial software (Ace Money Lite is free)
  • Budgets. One teenager is given $150/month in allowance, but she has to buy everything: clothes and gas.
  • Avoid credit card debt (but start building credit history in college)
  • Student loan debt. With her dad out of work, a college student chose a  state school when show the debt she would have.
  • Taxes and federal spending
  • Entrepreneurship. Micro Business for Teens. Ethan pays his own cell phone bill. Linnea pays her way to China.
  • Investing. Stock Market simulation.

Resources:
Career Exploration article Pursuing Their Dreams: Career Exploration for High School Students

Schoolhouse Teachers offers my Career Exploration 8 week class

Free! National Endowment Financial Education (NEFE) High School Financial Planning Curriculum http://www.hsfpp.org/

Generation Change for youth groups and Foundations in Personal Finance for schools at http://DaveRamsey.com

Discovering God’s Way of Handling Money from Crown.org 10 weeks , individual or class
Money Matters for Teens Ages 15-18 Edition by Larry Burkett (oldie but still available on Amazon.com)

Micro Business For Teens books at http://MicroBusinessForTeens.com

Starting a Micro Business television show on YouTube

Our federal budget graphically displayed at http://WallStats.com

Tax return simulations from the IRS at Understanding Taxes www.irs.gov/app/UnderstandingTaxes

 

Tune in for the next Dollars and Sense show on February 27, 2014 when I will discuss tax breaks for homeschoolers.

Carol Topp, CPA

 

Teach pre-teens about money: Dollars and Sense Show # 9

DollarsSenseShow9

In this episode of the  Dollars and Sense Show host Carol Topp discusses teaching your pre-teens about money.

Listen to the show here 

Show notes:

Recap: Our motivation to be teaching kids about money:
Other people’s bad examples are all around us, including the US government.
Avoid excessive debt. College debt now exceeds credit card debt.
Someone is watching!
Avoid boomerang kids. We are raising adults, not children

How to Teach
Natural style. As you go about your day. Real life examples.
Get someone else: Sunday school, Scouts, Homeschool co-op
Focused teaching: Family nights, games, books

What to Teach: Pre-teens

  • Allowance. Not always in cash. Try a clothing allowance
  • Savings Account. Power of compound interest. Match their savings.
  • What things cost. Houses, cars, pets, clothes, etc. Explain sales tax.
  • What people earn. Occupations.
  • Start earning money. Extra chores around the house or for family and neighbors. Really motivated kids should read Micro Business for Teens

Resources:

Boy Scouts, American Heritage Girls money badges
The Secret of Handling Money God’s Way from Crown.org Ages 8-12. 12 lessons. individual or class
Money Matters for Teens Age 11-14 Edition by Larry Burkett (oldie but still available)

Career Exploration article Pursuing Their Dreams: Career Exploration for High School Students
Schoolhouse Teachers offers my Career Exploration 8 week class
Micro Business for Teens
Starting a Micro Business television program on YouTube

Kids can play popular online money management games such as Road Trip to Savings, Financial Football, Peter Pig’s Money counter, Money Metropolis, Financial Soccer, Record shop tycoon, Burger Restaurant

 I’m not familiar with these games, so if you have an opinion for or against, please drop a note in the comments.

Tune in for the next Dollars and Sense show on February 13, 2014 when I will discuss teaching your teenager about managing money.

Carol Topp, CPA