Is a homeschool tutor an employee of the family who hires her?

Teenager&Teacher

I am hoping you can help me. I recently got hired as a homeschool teacher. I am reading articles that say I am not an independent contractor and this is really concerning me. I am hearing that I am an employee and to do things legally my employer has to fill out all this paperwork.

I want to be legal, but I don’t want to burden my new employer with all of this.

She did give me materials, an hourly wage and the times she wants me to come over.
Thanks,
Stephanie

Stephanie,

Thank you for contacting me. Worker status as an employee or independent contractor is a difficult and confusing issue.

What the IRS says about worker status
The IRS says that the facts and circumstances of each situation determines the worker status, not our desire to avoid paperwork and taxes(!). But they are the IRS, so of course they will say things like that!

What to do as a independent contractor
In practice, you and the family who hired you need to have a common understanding of your employment situation. If you agree to be an IC, then make sure you act like one. Have a written agreement stating you agree to do a certain job for a certain amount of pay. Both parties should sign it. Invoice the family on a regular basis listing the times and hours you worked for them. Make sure the family does not tell you how to do your job; you should already know how to do your job. You should also bring your own tools and supplies, although the student can have their own school supplies and books as well.

I think it is also fairly typical for private tutors to be ICs rather than employees. You are much like a piano teacher who agrees to go to a family’s home to teach. The IRS has a tendency to look at industry practice when determining worker status.

You cannot avoid some paperwork
Make sure the family gives you a 1099MISC and you report the income on your taxes at the end of 2014. You should also fill out a W-9 form Request for Taxpayer Identification Number and give it to them, so they have your legal name and SSN.

All these practices will help confirm your worker status as an IC, rather than an an employee.

I hope that helps.

Carol Topp, CPA
HomeschoolCPA.com

Homeschool co-op has a super volunteer. Can she be paid?

SuperMom Cartoon

Hi Carol,

Our co-op is a nonprofit corporation. Almost all of our tutors in the co-op are moms with kids in the program. The moms do not get pay in money for teaching but are offered “credits” against tuition.

1) Are we correct to assume that we are not dealing with either Independent Contractors (IC) or employees in this circumstance?

2) We have one tutor who gets “credits” and payment. Can we regard her as an IC if she submit an invoice?

We do have a few tutors whom we pay and we will need to look more closely into invoices and 1099 MISC.

Thank you so much for your advice. If these questions are covered in your ebook, please let me know.

-MG

 

Dear MG,

Thank you for contacting me. Let’s see if I can answer your questions.

1. Sounds like your tutors are volunteers. You thank them with tuition discounts (or “credits” as you call them). The more a person volunteers, the larger the discount/credit. There is no problem with doing that, except the “credits” are really a form of compensation for her services and are taxable income to the recipient. Your”volunteers” won’t like hearing that news!

Paying a Volunteer

2. Paying a volunteer gets very tricky. She’s no longer a volunteer because she is paid. She’s actually a mix; some volunteer and some paid. That’s what’s confusing. If you can clearly separate her volunteering from her paid tasks, then do that. For example, if she tutors and gets credits (which are taxable compensation) and then in addition designs your website for free, it’s pretty easy to separate those two jobs.

Super volunteers

But some people are what I call “super volunteers.” They volunteer so much beyond their discounts or credits that the organization pays them for their extra volunteering. But volunteers cannot get paid, so she’s either an employee or an IC.I cannot determine her worker status with the information you gave me.

If you want to treat her like an independent contractor, then she cannot receive benefits like tuition credits. The value of these credits need to be reported to the IRS and added to her taxable income.
I discuss this in Money Management in a Homeschool Organization. See Chapter 12.

Cover Money Mgmt HS Org

The Money Management book will be helpful and so will my Paying Workers in a Homeschool Organization book, because it shows the forms needed for employees and Independent contrcators.

 

Carol Topp, CPA

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Is a homeschool co-op teacher an independent contractor if paid by the parents?

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After reading through a bit of your material, we have decided that each family will pay our homeschool co-ops teachers individually. How would we label teachers that are not on a payroll, not volunteers, and not an independent contractor of the co-op?

The way we look at is that we simply provide a space and venue for outside teachers to offer their services. Is this correct? Our group will not provide them with any money. However, the group plans on “negotiating” the per student cost of a class.

Thank you for your insight
Heather

Heather,

Thank you for contacting me.

Teachers that are not your employees are called independent contractors IC), hired by each parent, but not the co-op.

I think you explained the arrangement correctly.

I recommend you have a written statement explaining what the co-op will do and what you will not do for the ICs. Have each teacher sign it. Call it a Memorandum of Understanding (MOU). MOU’s are not legally binding and do not involve an exchange of money. They are different from a contract in that way.

Be careful about too much negotiating with the teachers. You don’t want to give the appearance that they are working for your co-op. You could certainly tell them a typical fee that parents would be willing to pay, but ICs are supposed to bear the risk of doing business which includes setting their price. In other words, help them by offering a suggested range of fees, but do not dictate what they can charge.

 

Cover Money Mgmt HS OrgHave questions about paying teachers in your homeschool co-op? My latest book, Money Management in a Homeschool Organization will help. I devote a chapter to hiring workers.

Order a copy today.

You may also find these two podcasts helpful:

Paying Workers in a Homeschool Organization Part 1

Paying Workers in a Homeschool Organization Part 2

 

Carol Topp, CPA

Paying Workers in a Homeschool Organization Part 2 podcast

DollarsSenseShow18

Do you pay workers in your homeschool organization?

Do you know what form to to filing with the IRS?

Homeschool CPA, Carol Topp, will share the details of what you need to know about paying workers in a homeschool organization in this 30 minute podcast. Part 2 of a 2 part series.

Listen to the podcast

 

Show Notes:

Applying for EIN. Use IRS Form SS-4. Read this helpful article first Getting an EIN from the IRS.

IRS forms to give to independent contractors (IC).

  • Use IRS Form W-9 to collect the IC’s legal name and EIN.
  • Read IRS Pub 15A Employers Supplemental Tax Guide.
  • Give Form 1099MISC to every IC paid more than $600 in a calendar year. Unfortunately Form 1099MISC cannot be printed on your home printer. You must order it from the ITS or buy a set at an office supply store. I use FileTaxes.com to file and mail Form 1099MISC.

IRS forms to give to employees

  • Collect a W-4 and an I-9 (Immigration) from each employee. Get employment forms at IRS.gov
  • Read IRS Pub 15 Employers Tax Guide
  • Give each employee a W-2 at the end of the year. (I use FileTaxes.com to file and mail the W-2’s to the employees)
  • Form 941 or 944 to pay your employer taxes (Social Security and Medicare). Find employment forms at IRS.gov.  I use FileTaxes.com to prepare and file 941/944 or fill in online print and mail.

What to do if you are paid by homeschool organization an receive a 1099MISC

  • File Schedule C Profit or Loss from Business of the Form 1040. List all your income and expenses from being a independent contractor.
  • Pay federal income tax and  self-employment tax (same as Social Security and Medicare for self-employed people) using Schedule SE (attached to your Form 1040.

If you find these forms confusing, consider a private consultation with Carol Topp, the Homeschool CPA. She can help you prepare and file the correct forms.
Carol mentioned a few helpful resources:

Cover Money Mgmt HS Org

Paying Workers in a Homeschool Organization (short ebook)

Questions and Answers for Homeschool Leaders (ebook)

Money Management in a Homeschool Organization (newly expanded) in paperback or ebook. The Paying Workers ebook is incorporated as a chapter in this book, so you don’t need to purchase both.

Other helpful books and articles for homeschool leaders can be found at HomeschoolCPA.com

 

Be sure to listen to the first part of this podcast (Episode #17) where Carol explains the difference between employees and independent contractors.

Paying Workers in a Homeschool Organization Part 1 podcast

DollarsSenseShow17

Do you pay workers in your homeschool organization?

Are they employees or independent contractors? Do you know the difference?

Homeschool CPA, Carol Topp, will share the details of what you need to know about paying workers in a homeschool organization in this 30 minute podcast. Part 1 of a 2 part series.

Listen to the podcast here.

Carol mentioned a few helpful resources:

Cover Money Mgmt HS Org

Paying Workers in a Homeschool Organization (short ebook)

Questions and Answers for Homeschool Leaders (ebook)

Money Management in a Homeschool Organization (newly expanded) in paperback or ebook. The Paying Workers ebook is incorporated as a chapter in this book, so you don’t need to purchase both.

 

 

Be sure to listen to the second part of this podcast when Carol shares what forms you need to be filing with the IRS when you pay workers.

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

Cover Money Mgmt HS Org
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?

 

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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