Do we file 1099s for teachers before we are a 501c3?

We board members just want to clarify something about issuing the 1099 to our five paid teachers. Do we need to wait until we have our 501(3)(c) status before we issue them?

In your book Paying Workers in a Homeschool Organization,  Chapter 3, you wrote about the difference between an independent contractor and a worker. I had a hard time trying to classify which one it would be for our teachers. Three of our teachers are former homeschool moms, one is a former homeschool student, and one is a single lady who has taught a variety of classes over the years. They really don’t have any expenses, but if they do, they get reimbursed for them. Is this enough information for you to tell me which category they fall under?

Thank you for taking the time to answer my questions,
Lisa

Dear Lisa,
You should not wait until your organization has 501c3 tax exempt status to issue the 1099-MISCs.

As soon as it formed as a nonprofit corporation, your homeschool group could legally start running your program, paying workers, etc.

As a matter of fact, your homeschool group is REQUIRED to file the 1099-MISC if it paid any individual more than $600 for their services in 2019.

That’s a requirement whether an organization has 501c3 tax exempt status or not.


To prepare your IRS Form 1099-MISC, I recommend Yearli.com. I’ve used them for years. It’s fast, easy, inexpensive ($4.99 per 1099-MISC) and all online, so there are no paper forms to mail!

If you use my Yearli referral link, you receive a 15% discount and I get a small referral fee. https://mbsy.co/rzrbp

Making a worker determination can be confusing. Unfortunately, I cannot determine if your teachers are Independent Contractors or employees from what you explained.

Since you have my book, Paying Workers in a Homeschool Organization, look at Chapter 3 and pay close attention to page 44 where I discuss workers who provide the key activity of the business.  It is a key factor that the IRS (and now states like California) uses in determining that your homeschool teachers are probably employees.

This blog post may help as well: Why I think most homeschool teachers should be paid as employees

I do offer a phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. Worker Classification Consultation.
The phone call will be followed up with an email containing a fact-based determination and information to help you take the next steps. My fee for this consultation is $100/hour. Typically 1-1.5 hours. 

Please contact me to schedule a phone consultation.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

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