Checklist for Homeschool Organizations Applying for 501c3 Tax Exempt Status
The process to form a nonprofit homeschool organization and apply for tax exempt status can seem daunting. This checklist will help you know the steps to take and the correct order.
Before you begin I highly recommend that you arrange a personal consultation with one of HomeschoolCPA’s Recommended Homeschool Consultants. These individuals are experienced homeschool group leaders who have been trained and mentored by Carol Topp, CPA to help homeschool groups apply for 501c3 tax exempt status with the IRS. They also have years of experience in leading a homeschool organization. Ask them anything! They can help!
Phase I: Setting Up Your Organization
- Choose a board of directors. A minimum of three people are needed: a president/chair, a treasurer, and secretary. Board members should be unrelated to each other. More is usually better, including a vice-president/vice-chair. Don’t skip this step! It is the foundation and essence of creating a nonprofit.
- If you need training on what a nonprofit board does and is, then the Board Training Video Set is for you!
- The board should choose a name for your nonprofit. Research the IRS Charities web site, the internet, and your state’s Secretary of State’s Office to be sure it is not already taken.
- the board develops a mission statement and organizational bylaws—the rules by which the organization will operate. Sample bylaws.
- Read the articles on nonprofit incorporation at Helpful Articles
- The board should vote to form a nonprofit corporation and apply for IRS 501(c)(3) tax exempt status.
- Create a budget and list sources of income and expenses. The Financial Reporting webinar (free) has sample budgets.
Phase II: Forming a Nonprofit Organization
Phase I and II are explained in the webinar Create a Nonprofit for Your Homeschool Community.
- Incorporate as a nonprofit organization in your state. Submit Articles of Incorporation to the appropriate office in your state government with the required fee. This is usually the Secretary of State’s Office.
- Warning: Most states have a specific form for you to use the state form and be sure to include the IRS-required paragraphs concerning purpose, limitations and distribution of assets upon dissolution. See the IRS-required language at http://HomeschoolCPA.com/Samples. The state form probably does not include the IRS-required language, so you must be sure to include it by attaching it as an additional page.
- Obtain a Federal Employer Identification Number (EIN) by submitting IRS Form SS-4 online at www.IRS.gov. Search for “EIN.” Here’s some tips for getting an EIN.
***At this point you can open a checking account, begin collecting fees, and start running your program! The remaining tasks can happen concurrently with running your program. ***
Phase III: Apply for 501c Tax Exempt Status
Phase III is explained in the webinar 501c3 Application for Homeschool Nonprofits.
- Read the book The IRS and Your Homeschool Organization: Tax Exempt 501(c)(3) Status
- Have your board vote to approve filing for 501(c)(3) tax exempt status. Approve the expenditure of funds to pay the IRS fee ($275 or $600) and any professional fees.
- Hire a Recommended Homeschool Consultant to help you apply for 501c3 tax exempt status.
Phase IV: IRS and State Fillings
You’re not finished once you get 501c3 tax exempt status form the IRS! You’ll need to file some reports with your state as well.
Phase IV is explained in the webinar IRS and State Filings for Homeschool Nonprofits.
- Register as a charity within your state. Research what your state requires from nonprofit organizations. The webinar mentioned above will help!
- Read IRS Publication 4221 Compliance Guide for 501(c)(3) Charities that was mentioned in your IRS determination letter. Discuss your record keeping and reporting requirements with your board.
- Maintain 501c3 tax exempt status with the IRS by filing the annual 990/990-EZ or 990-N Information Returns.
- Consider a Board Member Manual to keep important papers, make a calendar, and train your board in their roles and responsibilities.
Carol Topp, CPA, the owner of HomeschoolCPA, assisted homeschool leaders for more than 20 years. Through her website HomeschoolCPA.com, books, podcast, and webinars, she makes confusing IRS rules easy to understand. Carol has assisted over 200 organizations receive 501c tax exempt status.