What do you do after your homeschool group has tax exempt status?

Getting 501c3 tax exempt status is a great accomplishment! If you’ve done it, congratulations!

But you’re not finished with government forms just yet! Your state and the IRS have several reports that must be filed regularly to maintain that precious tax exempt stats.

Almost every homeschool group will have some reporting with the IRS and their state.

Carol Topp, the Homeschool CPA, will help you understand the IRS and state reports and file them yourself! In her webinar IRS and State Filings for Homeschool Nonprofits, Carol will explain the IRS annual returns and how to determine what your state may require as well.

You will learn:

  • The importance of maintaining 501c3 tax exempt status
  • The IRS Form 990 series. What form your group needs to file.
  • How to know if you’ve missed filing IRS returns
  • How to see Form 990-EZs and 990s from other nonprofits.
  • An explanation of the IRS Form 990-N.
  • What filings may be required by your state with examples

The live webinar will be on Wednesday August 21, 2019 at 8 pm ET/7 pm CT/6 pm MT/5 pm PT

The webinar will last approximately one hour. There will be time for your questions. It will be recorded for viewing later.

The cost is $10 and you will receive:

    • Access to the live webinar on Wednesday August 21, 2019
    • An opportunity to ask questions vis the live chat room
    • Handout of the slides
  • Recording to the webinar
  • IRS Forms, Instructions and samples
  • Template to summarize your state and IRS filing requirements for your board

 

More information at HomeschoolCPA.com/Filings

 

Carol Topp, CPA

Tiny Homeschool Groups: Do We Need to Pay Taxes?

Tiny Homeschool Groups: Do We Need to Pay Taxes?

Tiny homeschool groups have different challenges than large programs. They are limited on resources, volunteers, and activities. But they still have questions about legal status, money and taxes that the large homeschool organizations have.

In this 4-part podcast series, Carol Topp, CPA answers the common questions that tiny homeschool groups face. All podcasts are available at HomeschoolCPA.com/Podcast

  • Episode #175 Are We a Nonprofit?
  • Episode #176 Do We Need to File Anything?
  • Episode #177 Do We Need to Pay Taxes?
  • Episode #178 Do We Need a Bank Account?

In this episode Carol Topp will explain taxes for tiny homeschool groups:

  • How a tiny homeschool group can be tax exempt without applying.
  • How tiny groups can self-declare tax exempt status with the IRS.
  • State income tax exemption.
  • The IRS annual report Form 990-N.
  • Sales tax for small nonprofit organizations.

 

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 1,000+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/

 

Featured Product

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

 

 

 

Webinar: IRS and State Filings for Homeschool Groups

Getting 501c3 tax exempt status is a great accomplishment! If you’ve done that, congratulations!

But don’t think you are done with government forms just yet! Your state and the IRS have several reports that must be filed regularly to maintain your precious tax exempt stats.

Carol Topp, CPA the HomeschoolCPA has helped over 100 homeschool organizations apply for tax exempt status. She has prepared a webinar on IRS and State Filings for Homeschool Nonprofits. Carol explains the IRS annual reports for tax exempt nonprofits and how you can know what your state requires.

The LIVE webinar will be held on Wednesday August 21, 2019 at 8 pm ET, 7 pm CT, 6 pm MT and 5 pm PT

You will learn:

  • The importance of maintaining 501c3 tax exempt status
  • The IRS Form 990 series. What form your group needs to file.
  • How to know if you’ve missed filing IRS returns
  • How to see Form 990-EZs and 990s from other nonprofits.
  • An explanation of the IRS Form 990-N.
  • What filings may be required by your state with examples

After the webinar you will be equipped to file on your own the IRS Form 990-N and state forms saving you hundreds of dollars in professional fees.


This webinar is the third in a series of 3 webinar to teach homeschool nonprofit leaders how to create a nonprofit, get and maintain tax exempt status. The other two webinars are:

I highly recommend you watch the first two webinars on Create a Nonprofit for Your Homeschool Community and 501c3 Application for Homeschool Nonprofits. They are both a precursor to this webinar and tells you what to do to create a nonprofit and apply for 501c3 tax exempt status.


 

This third webinar on IRS and State Filings is for Homeschool Nonprofits if for groups that have received (or applied for) for tax exempt status with the IRS and:

  • Are unsure about IRS annual returns
  • Don’t know what forms their state requires from nonprofit organizations
  • Do fundraisers or ask for donations
  • Received a letter from the IRS or their state about missed reports
  • Need to know what to do to maintain their tax exempt status
  • Want to know what it takes to run a compliant nonprofit organization
  • People who want to DIY the IRS and state flings but need an experienced expert to teach them how.

The webinar will last approximately one hour. There will be time for your questions. It will be recorded for viewing later.

The cost is only $10 and you will receive:

  • Access to the live webinar on Wednesday August 21, 2019
  • An opportunity to ask questions via the live chat room
  • Handout of the slides
  • Recording of the webinar to watch later
  • IRS Users Guide for Form 990-N
  • Sample IRS Form 990-N for a homeschool group
  • Blank IRS Form 990-EZ and Instructions
  • Sample letter to guide to to understand your state and IRS filing requirements

I hope to see you LIVE on August 21, 2019 at 8 pm ET for this webinar!

 

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders maintain tax exempt status.

Should our bylaws include an indemnification clause?

I’m reading your amazing ebook The IRS and Your Homeschool Organization, and I noted a difference in the bylaws example in your ebook vs your website.

There is an Article 7 Indemnification on the website sample bylaws.

Is an Indemnification section necessary to have in our bylaws?

Thank you,
Nicole

 

Nicole,

I’m glad the book is helpful!

You asked, “Is an Indemnification section necessary?”

 

What:

Let’s start by explaining what indemnification is. It means ‘to indemnify’:

indemnify

to compensate for damage, loss sustained, expense incurred, etc.
to guard, secure against anticipated loss; give security against (future damage or liability).

 

How does it work?
A nonprofit organization might include in their bylaws a clause such as this:

Indemnification
“The Organization agrees to indemnify, defend and hold harmless the board members, its officers, directors and employees, from and against all liability, loss, cost or expense (including attorney’s fees) by reason of liability imposed upon the Organization, arising out of or related to organization’s activities, whether caused by or contributed to by the members or any other party indemnified herein, unless caused by the sole negligence of the member or any other party indemnified herein. Organization may maintain insurance, at its expense, to protect itself and any such person against any such liability, cost or expense.”

Why have an indemnity clause:
It assures nonprofit board members that the nonprofit organization will pay any legal fees related to the organization’s activities or their board service (unless caused by the sole negligence of the board member). Typically, the nonprofit purchases Directors and Officer (D&O) insurance to pay for the legal bills when and if they arise.

Some people will not serve on a nonprofit board without an indemnity clause and without Directors and Officer insurance. So having this clause in the bylaws and a D&O policy helps attract and retain board members.

 

Why not have an indemnity clause:
Some nonprofits are small and they do not have the financial means to pay legal bills of board members or purchase Directors and Officer insurance.

True Story: I am on the board of a local charity (not a homeschool group) and we were reading over the bylaws word-by-word and updating them (a great idea to do that every few years!). The bylaws had an indemnification clause much like the one above. We were all a bit confused by the language and unclear what it meant.
One of the long-time, experienced board members said that the last sentence was the most important. It said: “The organization may purchase insurance for such indemnification as determined by the board.” This is a tiny charity, all volunteer, and we do not carry insurance to cover Directors and Officers. We decided to delete the indemnification clause since we had no resources to pay for attorney fees or D&O insurance. The indemnification clause was a promise we could not keep.

 

What should we do?

It’s best to research indemnification and talk it over with your board. Your board can decide to include it in your bylaws or not.

This is not legal advice. I recommend you contact an attorney if you need additional assistance.

 

Carol Topp, CPA

Helping Homeschool Leaders

Tiny Homeschool Groups: Do We Need to File Anything?

Tiny Homeschool Groups: Do We Need to File Anything?

Tiny homeschool groups have different challenges than large programs. They are limited on resources, volunteers, and activities. But they still have questions about legal status, money and taxes that the large homeschool organizations have.

In this 4-part podcast series, Carol Topp, CPA answers the common questions that tiny homeschool groups face. All podcasts are available at HomeschoolCPA.com/Podcast

  • Episode #175 Are We a Nonprofit?
  • Episode #176 Do We Need to File Anything?
  • Episode #177 Do We Need to Pay Taxes?
  • Episode #178 Do We Need a Bank Account?

In this episode of the HomeschoolCPA podcast, Carol Topp discusses:

  • Bylaws do not typically need to be filed anywhere. They are an internal document. Sample bylaws for a homeschool group
  • Articles of Association (if you remain an unincorporated association) or Articles of Incorporation (if you formed a nonprofit corporation in your state). Samples available here
  • Charitable solicitation registration if you solicit donations or hold fund raisers in your state. Get information on your state’s filing requirements from https://www.harborcompliance.com/information/nonprofit-compliance-guide
  • Business licenses for nonprofits (only 6 states require a business license)
  • Employer Identification Number. Helpful tips.

 

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 600+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/

 

Featured Product

Homeschool Co-ops:
How to Start Them, Run Them and not Burn Out

Have you ever thought about starting a homeschool co-op? Are you afraid it will be too much work? Do you think you’ll have to do it all by yourself? Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!

 

Is your homeschool group “just a bunch of moms”?

I’ve heard this too many times from homeschool group leaders to ignore it any longer.

“We’re just a bunch of homeschool moms”

It’s usually used along with one of these sentences,

…therefore we don’t want to (or need to) ...

  • be formally structured
  • follow the law
  • pay taxes
  • apply for tax exempt status
  • pay our workers as employees (according to the law)
  • record our income or expenses
  • notify our church host of the for-profit nature of our group, etc…

I’ve heard or read just about every one of these excuses!

Does saying “we’re just a bunch of homeschool moms” imply that:

  • homeschool moms are incapable of running legitimate businesses or nonprofit organizations?
  • homeschool moms can’t understand legal and tax issues?
  • homeschool moms are claiming ignorance as a defense against obeying the law?

Homeschool moms are intelligent, capable women. I know of hundreds of homeschool moms running businesses and nonprofit organizations very successfully and legally. I know some that are accountants and lawyers or, in the true spirit of homeschooling, are self-educated to understand complex tax and legal situations.

So let’s not imply that homeschool moms are not capable or not intelligent by saying “we’re just a bunch of homeschool moms”!

Instead, we should do what we do at home with our children:

Get educated about the legal and financial aspects of running a homeschool organization.

I have resources to help:

 

Carol Topp, CPA

Helping Homeschool Leaders who are smart and capable!

 

Homeschool leader stepping down: Who to notify?

Hi Carol,

I am stepping down from the leadership of my homeschool group and wonder what I need to do. What forms to file, contacts to make, etc. Can you direct me, please? We are a 501c3 in Pennsylvania.

Thanks in advance!

Jill

 

Jill,

Congratulations on your “retirement”! Well done, good and faithful servant. 🙂

There might be quite a few things to do to remove your name from state and IRS documents.

In my ebook Homeschool Organization Board Manual I explain what to do when a board members leaves or the board changes.

This Board Manual might be helpful to your remaining board members since it is a combination of a template for your board to create binders to keep important documents and a board training manual to explain the board’s duties and responsibilities.

 

 

 

It is common for nonprofits to change leaders and signers on the checking account quite frequently, maybe annually! Here’s what you need to do if your board members change.

Notify the Internal Revenue Service (IRS) when you file your annual information return, Form 990-N, 990-EZ or 990 that the board members have changed. You do not have to notify the IRS mid-year; only notify them when you file the 990.  The 990-N electronic postcard only asks for one officer’s name. The Forms 990-EZ and 990 have you list all board members.

Notify your State: Your state may require an annual report to the Secretary of State Office and/or the Attorney General. Often the states require an annual update and on that report you list the current board members. Each state is different, so you’ll have to research the details for your state. Research using this helpful website: https://www.harborcompliance.com/information/nonprofit-compliance-guide

Change Your Mailing Address: You can change your address with the IRS by simply providing the new address on your annual information return, Form 990-N, 990-EZ or 990.

Changing your address with your state may involve several agencies including the Secretary of State and Attorney General. Each state is different, so you’ll have to research the details for your state. You can research using this website: https://www.harborcompliance.com/information/nonprofit-compliance-guide

Change the Responsible Party on your EIN: You can change the responsible person on your organization’s Employer Identification Number (EIN) by filing an IRS Form 8822-B https://www.irs.gov/pub/irs-pdf/f8822b.pdf.

Change your Registered Agent: If you are a nonprofit corporation in your state (meaning you filed official Articles of Incorporation with your state), you assigned a Registered Agent. This is a personal who is a resident of your state and should always know how to reach your organization. Many states list the current Registered Agent on their websites. Do a search on “YOUR STATE Corporate search” then follow links to your state governments’ list of corporations (both for-profit and nonprofit). The list of corporations is usually maintained by the Secretary of State’s Office.

To change the registered agent for your organization, go to your Secretary of State’s website and look for a document called Change of Registered Agent.

Notify the bank: You will probably have to visit your bank in person with the new checkbook signers. They will need identification (like a Drivers License). At that time they can change the mailing address on file.

Make sure you remind the new treasurer to change the password for online access to the checking account as well.

 

I hope that helps!

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

12 moms want to start a homeschool co-op. How to get started

Carol,

12 mommies started a homeschool co-op. We offer an educational learning class three times a month and social events (field trips). We are wanting to do things right. We are thinking of collecting dues and selling goods to have money for trips. How do we get started with registering as nonprofit, filing a 501c3, doing everything legal in my state?
Courtney

 

Courtney,

Good for you and the 12 families to help each other homeschool by forming a co-op!

Start by reading through my checklist of steps to form a nonprofit and apply for tax exempt status.

One of your first tasks will be to form a board, the 3-5 people who will lead the group and make major decisions.

My newest webinar Create a Nonprofit for Your Homeschool Community will offer you some great tips to form a board.

 

Then my book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out should be a big help.

Finally one of your officers (usually the Treasurer) should read my book The IRS and Your Homeschool Organization. It explains the process to apply for 501c3 tax exempt status.

When you’re ready contact me and we can set up a phone call to see if you’re set up enough to apply for 501c3 tax exempt status!

I’m planning another webinar on applying for 501c3 tax exempt status in June 2019. Sign up for my email list to be notified when it’s going to happen.

Carol Topp, CPA

HomeschoolCPA.com

Helping Homeschool Leaders

Inurement: a funny word the IRS doesn’t like!

The IRS uses an unusual word that most of us don’t know the meaning of: inure or inurement. Here’s how the IRS uses it in their definition of a 501(c)(3) tax exempt organization:

A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator’s family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization. (emphasis added)

Source: https://www.irs.gov/charities-non-profits/charitable-organizations/inurement-private-benefit-charitable-organizations

What does inurement mean?

“Inurement” means “benefit.”  The IRS forbids a tax exempt organization to use its income or assets to directly or indirectly benefit an individual, a person with a close relationship with the organization or a person who is able to exercise significant control over the organization. These can be board members or donors.

Jeramie Fortenberry an attorney, gives an excellent explanation of inurement in his website article “The Inurement Prohibition & Non-Profit Organizations.”

Non-profit organizations are subject to what is known as the nondistribution constraint.  Simply stated, this means that non-profit organizations cannot distribute profits to those who control it.  The nondistribution constraint is the fundamental distinction between non-profit organizations from for-profit organizations.  (emphasis added)

Any time assets of the organization flow through to benefit the organization’s insiders, whether directly or directly, inurement is an issue.

What are some examples of inurement?

  • A nonprofit executive used the organization’s money to pay his child’s college tuition, lease a luxury car for his wife, have his kitchen remodeled, and rent a vacation house at the beach.
  • The CEO at a tax-exempt hospital used charitable assets to pay for personal items such as liquor, china, crystal, perfume, an airplane, and theater tickets.
  • A nonprofit art gallery exhibits artwork created by its members for a fee but grants board members the same service without cost.
  • The nonprofit organization’s sole activity is conducting seminars and lectures based on the program owned by its president and his for-profit company.
  • An educational organization had four board members who voted themselves free tuition to the program for their children. This benefit ranged from $2,000-$4,000 per board member per academic year.

Sources: https://www.nolo.com/legal-encyclopedia/what-is-private-inurement.html and https://boardsource.org/resources/private-benefit-private-inurement-self-dealing/ and https://www.forpurposelaw.com/the-private-benefit-rule-three-more-examples/

What happens if a nonprofit practices inurement?

I would hope inurement would never happen in a homeschool group, by Mr. Fortenbury discusses the IRS’s options against a nonprofit organization.

The inurement restriction is absolute: An organization that violates this prohibition will not qualify (or will cease to qualify) for tax exemption.

In cases involving inurement, the IRS may impose the penalties in lieu of or in addition to the revocation of tax exempt status. 

This system effectively gives the IRS two options to enforce the nondistribution constraint.  In blatant violations of the inurement prohibition, the IRS can both revoke tax exemption and impose monetary penalties under the intermediate sanction regimes. In less severe cases, the IRS may seek to correct the situation through intermediate sanctions alone.

For the full article visit: https://www.fortenberrylaw.com/inurement-prohibition-nonprofit-organizations,

 

So, please homeschool leaders, stay away from inurement (giving benefits or the assets that belongs to the nonprofit) to any insiders (those who exercise control over the organization).

We’re homeschoolers and we’re better than that.

Carol Topp, CPA

Converting a Business to a Nonprofit: Tax Exempt Status

 

Some homeschool groups that started as a for-profit business want to convert to a nonprofit organization. Most of these nonprofit organization also want 501c3 tax exempt status from the IRS as well.

In this 3-part podcast series Carol Topp, CPA has explained the basics of a nonprofit organization and how to form a nonprofit corporation. In this third episode Carol discusses 501c3 tax exempt status.

The first two episodes (#168 and 169) can be found at HomeschoolCPA.com/Podcast

Show Notes

In this episode, Carol will discuss:

  • The benefits of tax exempt status
  • The application process and Forms 1023-EZ and 1023.
  • Time and cost to apply for 501c3 status
  • A successor to a for-profit entity must use IRS Form 1023 (not the shorter 1023-EZ) to apply for 501c3 status.

 

Featured Product

This webinar recording on Creating a Nonprofit for Your Homeschool Community will be very helpful as you launch a homeschool group

This webinar recording is helpful for new nonprofits, existing homeschool groups especially if you’re unsure if your group is a nonprofit, or for a business wanting to convert to a nonprofit organization.

The webinar runs about 90 minutes and covers:

  • The difference between a business and a nonprofit
  • What are the advantages and disadvantages of being a nonprofit
  • Forming a board: who can be one it, what do they do, etc.
  • Creating bylaws
  • Drafting a budget
  • Setting up a bank account
  • Forming a nonprofit corporation in your state
  • The timeline to get this all done
  • The expense to accomplish this

The cost is only $10!

For more information visit HomeschoolCPA.com/CreateNP

 

In the podcast I mentioned my book, The IRS and Your Homeschool Organization.

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

 

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