Can a teacher work off her homeschool co-op tuition by teaching?

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Carol,
Some of our paid teachers who have kids in our homeschool program still owe our group money. Can we just reduce their salary to reflect their net debt to us?
For example, one of our teachers will make $1000 for teaching next semester, but she will owe us $1,588 for all of her kids’ classes. Can I just bill her for $588 and call it a day?
Another teacher might make $2,000 and owe $,1000. Can we just offer a salary of $1,000?

Kay B in IL

 

Kay,

Oh I wish things were as simple as you describe!

Unfortunately for the teachers you pay, you cannot simply net what they owe you with what you owe them. The reason has to do with taxes. Earned income from teaching is taxable income, but tuition the teacher pays to your co-op is not a tax deduction. 🙁

In my latest book, Money Management in a Homeschool Organization, I address this issue. Here’s what I wrote:

I heard of a homeschool leader who let parents work off their tuition by teaching classes as independent contractors. One morning she announced to her teachers, “You all just got paid today!” but no paychecks were given out because they still owed tuition.

Sorry, but it doesn’t work that way.

Being paid for rendering services is one transaction (earning taxable income). Paying tuition (which is a personal expense like food or clothing and not tax deductible) is another transaction. The two do not negate each other.

The correct method would be for the homeschool group to pay the independent contractor teachers with paychecks and then they pay their tuition fee as a separate transaction.

Why is it so important to separate the two transactions?

It has to do with taxes. The teachers need to report the income they earned on their tax returns at the end of the year. Tuition for their child’s homeschool class is not a tax deduction, so they should not be seen as canceling out.

If you’d like more information on managing the money in your homeschool group, order a copy of Money Management in a Homeschool Organization.

Carol Topp, CPA

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Teacher hired to teach homeschooled children asks about taxes

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I am currently an elementary school teacher who has been approached by parents that want their children home schooled, but would rather have a private teacher do the instructing. How would I file taxes if I chose to go that route?
Marcia

Marcia,

If you are hired to teach homeschooled children, then you are running a sole proprietorship business, much like a private tutor or a music teacher.
You will file taxes on a Schedule C Profit or Loss from Business as part of your Form 1040.

I have several blog posts advising people like you who want to offer services to homeschool parents.
Is it Homeschool or Mary Poppins?
Can I hire a homeschool governess?
Is it legal to homeschool other people’s children?

Good luck!

Carol Topp, CPA

Starting a homeschool program to help disadvantaged children

Hello,
I am interested in starting something similar to a (homeschool) co op only I am not sure if it actually qualifies as a homeschool co op.  My idea is that there are many children who have learning disabilities, medical conditions and others whose parents would like to homeschool but cannot because of economic reasons.
Therefore, I decided to set up a homeschool program where teachers, non-teachers, parents etc join together and teach groups of students that range from distinct ages and grades. I was also considering paying these parents instead of having them work voluntarily because some of them do have financial needs.
I have been a teacher for over ten years and have a masters degree in administration and supervision and I would like to help these students and parents.
I would be charging an annual and monthly fee in order to economically sustain the homeschool.
I would greatly appreciate your input.
Thank you,
Angela

 

Angela,

Thank you for contacting me.What you’re describing sounds more like a homeschool supplement program.

I have several blog posts advising  people like you who want to offer services to homeschool parents.
http://homeschoolcpa.com/is-it-a-homeschool-co-op-or-mary-poppins/
http://homeschoolcpa.com/can-i-hire-a-homeschool-governess/
http://homeschoolcpa.com/homeschooling-other-peoples-children-is-it-legal/

1) The first thing to do is to find out if  what you want to do is legal under the homeschool laws of your state. Some states limit how much or how often a non-parent can instruct the student and still be considered homeschooling.

2) Then you need to determine if your idea is economically viable. You mentioned offering to pay parent/teachers, but also wanting to offer services to economically disadvantaged families. So who will come and pay the fee? Sounds like you need a detailed business plan with financial projections.

3) Next you need to determine if this is a nonprofit educational program or a for-profit business. A nonprofit requires assembling a board, creating bylaws, filing for nonprofit incorporation in your state and tax exempt status with IRS.

Forming a for-profit business is easier, but then you are not eligible for donations, grants, etc that you may need to be financially viable.

That’s a lot to think about. There’s still a lot to be decided including how often your plan to meet and where.

Let me know if you would like to discuss your ideas in further detail.

Carol Topp, CPA

Can I hire a homeschool governess?

Jane Eyre Pictures, Images and Photos

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Dear Ms. Topp,

I found your website while trying to research information on hiring a private homeschool instructor for a friend of mine.  She’s a single parent who adopted a now 12-year-old girl.  She’s having a little bit of a problem in public school and I thought it might be a good idea to homeschool her for her middle school years.

Can you point me to some information on whether my friend can  hire a homeschool instructor to work with her daughter?  I know this may sound crazy, but I keep thinking what her daughter needs is a governess.  Or maybe I’ve read too many Bronte and Austen novels.  Any help you could provide would be most appreciated.

Sincerely,

Gordon

 

Gordon,

I think you are absolutely correct in using the term governess to describe your friend’s situation.
I have a blog post titled “Is It a Homeschool Co-op or Mary Poppins?” that addresses a similar question.

I have been asked questions similar to yours several times, so it not an unusual idea. It is quite an old idea as you reference (Jane Eyre is a favorite!)

I would direct your friend to do research in three areas:
1. Her state homeschool laws and see if a non-parent is allowed to instruct a child. I imagine it is allowed, she may just have to report the governess’ name and subjects covered on an annual basis (we do here in Ohio, for example)

2. Employer laws in your state.  A local CPA would be helpful here. The governess may be considered a household employee and that has easier tax reporting requirements (like annually, not quarterly filing).  Employer taxes (Social Security and Medicare) will need to be paid.

3. Perhaps consult with an attorney to draw up an employment agreement.  Perhaps a professional tutor or nanny/au pair service in your area may have sample agreements to use as a guide.

I hope that helps!

Carol Topp, CPA

Is your homeschool co-op’s hired teacher really an employee?

A homeschool nonprofit I work with called me quite frantic.  They had received a letter form the IRS.  It seems that a former teacher of one of their classes  was asking for an examination of her status as an independent contractor (using IRS Form SS-8).  She thought that she should be classified as an employee of this homeschool nonprofit.  If the IRS agrees with this worker, the homeschool organization may have to pay back taxes (Social Security and Medicare) and perhaps penalties.

Fortunately this homeschool group did many things right:

1. They had all their paid teachers sign a Independent Contractor Agreement.
2. They did not control the content of the class, nor dictate to the teacher what curriculum she must use.
3. They offered no benefits to teachers.
4. They did not train their teachers.

But these are only a few of the factors to address in making a worker determination.

How about your homeschool group?  Would you pass an IRS examination?

Do your hired teachers sign an Independent Contractor agreement?

Do you avoid controlling their work as you might an employee?

Here’s an RS brochure regarding employee or independent contractor status (IRS Pub 1779).

 

My new book Paying Workers in a Homeschool Organization explains in detail how to determine of your worker is an employee or an Independent Contractor.

You may want to have a private consultation to discuss your unique situation. I offer a Worker Classification Determination consultation to put your mind at ease.

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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Homeschooling Other People’s Children. Is It Legal?

Dear Ms. Topp,

I found your website while trying to research information on hiring a private homeschool instructor for a friend of mine.  She’s a single parent who adopted a girl from Russia.  She’s having a little bit of a problem in public school and I thought it might be a good idea to homeschool her for her middle school years at least to focus on her language skills and other abilities.

Can you point me to some information on whether she can even hire a homeschool instructor to work with her daughter?  I know this may sound crazy, but I keep thinking what her daughter needs is a governess.  Or maybe I’ve read too many Bronte and Austen novels.  Any help you could provide would be most appreciated.

Sincerely,

G.A.

Dear G.A.

I think you are absolutely correct in using the term governess to describe your friend’s situation.
I have a blog post titled “Is It a Homeschool Co-op or Mary Poppins?” that addresses a similar question.

I have been asked questions similar to yours several times, so it not an unusual idea. It is quite an old idea as you references (Jane Eyre is a favorite!)

I would direct your friend to do research in three areas:
1. Her state homeschool laws and see if a non-parent is allowed to instruct a child. I imagine it is allowed, she may just have to report the governess’ name and subjects covered on an annual basis (we do here in Ohio, for example)
2. Employer laws in your state.  A local CPA would be helpful here. The governess may be considered a household employee and that has easier tax reporting requirements (like annually, not quarterly filing).  Employer taxes (Social Security and Medicare) will need to be paid.
3. Perhaps consult with an attorney to draw up an employment agreement.  Perhaps a professional tutor or nanny/au pair service in your area may have sample agreements to use as a guide.

I hope that helps!

Carol Topp, CPA

Is it a homeschool co-op or Mary Poppins?

I started my website HomeschoolCPA to help homeschool organizations, but sometimes the lines between a family homeschool and a homeschool organization get a little fuzzy. Here’s one example of the new and creative ways the people are homeschooling today.

I am considering starting a homeschool with a group of 5 children. They are all from different families and none of them is my own. I have a Masters degree in education and am comfortable working as an independent contractor. I plan on teaching these children in one of the boy’s home with the parents’ blessing. Is this legal? What do I need to do to set it up? Would the parents need to set up a homeschool co-op? I am having difficulty finding information about this for Maryland. Thanks for your help!

Mrs. A in Maryland

Dear Mrs A,

Congratulations on your new venture. Teaching other people’s children is certainly a legitimate business. You will be a modern day governess. (like Mary Poppins!)

marypoppins

I do not believe the parents need to set up a homeschool co-op. But you need to set up a small business. I recommend these steps:

* Pick a business name, although you can use your own name

* Consider opening a business checking account to keep your business and personal expenses separate (it helps at tax time)

* Have a written agreement with the parents about your duties and your fees (i.e. how much and when will you be paid)

* Keep good records of all our expenses, especially mileage. Read my Small Business Start-up Guide available to download here: Small Business Start Up Guide

* Set aside 20-30% of your income after expenses (i.e. 20-30% of your profit) to pay income tax and self employment tax. You will probably also need to make quarterly estimates payments to the IRS. Here’s a great blog to help you learn more about being self-employed. http://junewalkeronline.blogspot.com/

I’m not familiar with Maryland’s homeschooling laws, but here in Ohio we must notify if someone other than the parent does a majority of the instruction. Maryland may have a similar notification rule. You might want to do a little digging on-line and ask the families that are hiring you about Maryland’s homeschooling laws.

Best of success to you!

Carol Topp, CPA