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,
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
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
Paying Workers in a Homeschool Organization-2nd edition
Thanks for addressing this! We do something very similar to the poster except we do ask for receipts and we require teachers to submit a reimbursement form at the end of the semester. Each semester we collect about $1,000 in reimbursable class fees, but ever since I have become treasurer I have noticed that about 1/3 of our parents/instructors don’t bother to file for their reimbursement and leave money on the table! Once the deadline for submitting receipts has passed, I just transfer the extra into our general fund and we use it to keep our membership fee low.
Is it okay for us to just bank the extra money like this?
Yes, it is fine for your organization to keep the amounts leftover and use it for future program expenses.
Carol Topp, CPA