New homeschool group wants to avoid paying taxes

I’m heading up a small group of about 20 homeschooling families. We may grow a bit, but we are in a small town, so I can’t imagine we’d ever be over 40 families big.

I’ve also set up a website and Google group. This is just information and communication for any area homeschooler to attend anything. It has about 50 families and growing.

What do I need to be aware of to be sure that we don’t become the kind of organizations (either of these groups) that have to file or pay taxes. We do not collect dues. If there is a field trip with a fee, each family just pays it at that time.

Thank you!
Kaysha

Kayla,

It sounds as if both groups are a small gathering of like-minded people. You said you don’t even collect dues! Amazing!

If you ever do collect dues, then open a checking account (or Paypal-like account) in the group’s name, so the money doesn’t look like your own personal money. This involves getting an Employer Identification Number (EIN) from the IRS to open a checking account.

So long as you organize and operate like a nonprofit (no profit motive and decisions made by a group of leaders not one person) and stay under $5,000 gross income per year, you will be automatically tax exempt in the eyes of the IRS. It is called “self declare” tax exempt status. You don’t have to officially apply for tax exempt status by filing the paperwork (Form 1023 or 1023-EZ) and pay the IRS application fees. Nice! But if your annual revenues start regularly being above $5,000/year, it is time to officially apply for 501c3 tax exempt status by filing the Form 1023/1023-EZ.

My webinar linked below walks you through the Form 1023-EZ line by line.

Additionally, the  IRS does request that all tax exempt organizations, even very small, self declared ones, file an annual Form 990N every year to maintain your tax exempt status. It’s only 8 questions.

You’ll have to call the IRS one time to be added to the IRS Exempt Organization list so you can file the annual 990-N ePostcard. Here’s how to do that and what to say: https://homeschoolcpa.com/how-to-self-declare-tax-exempt-status-2/

This checklist will keep you on track:  A checklist for new homeschool organizations

Then read the following articles in order:

1. What’s in a name?
2. Choosing a leadership team
3. Writing your mission statement
4. Getting an EIN from the IRS
5. Identifying who you are by writing bylaws
6. Sample bylaws
7. Budgeting basics

You can also check out a few of my books/webinars that might help set up your group to be a non-profit.

I hope that helps!

Carol Topp, CPA

HomeschoolCPA.com