Amy asks a common question: paying teachers at a homeschool co-op
For the past several years, our group has spent more (thousands more) than we have charged our members. We’re not technically “in the red” because of more prosperous years in the past. The reason we are spending so much money is that over 90% of our income goes to paying our parent-teachers ($15-$20/hour)! The rest of the money goes toward classroom supplies. I am sure that most parents are unaware of how the finances of this group are managed.
Have you heard of groups paying their teacher/parents? What do I need to understand about the various homeschool support and cooperative group structures that I don’t currently comprehend? Help!
Your situation sounds very familiar to me. I too was treasurer of my 40 family co-op and found that 75% of our budget was going to pay four paid teachers. The other 20 teachers were volunteer parents, myself included. Not all the families were using a paid teacher, but all were chipping in to pay for them. We also were finding that people were offering to teach because they thought they could get paid. We were losing our cooperative spirit. I knew something needed to change.
About the same time I was helping another homeschool group with some independent contractor/employee issues with the IRS. I wrote about it on my blog. You can read about it here:
Is your homeschool group’s hired teacher really an employee?
Update on Independent Contractors.
We decided to follow IRS guidelines and have the parents pay the teachers directly, like you would pay a piano teacher. The co-op was no longer paying the teachers.
I did some number crunching and found that we could lower our co-op fee from $150/family/semester to $75/family/semester. In addition we offered a $50 discount for teaching a class.
What happened was amazing! Wonderful, talented homeschooling mothers volunteered to teach a class! We had more volunteers than we could accommodate. REALLY! If a mother volunteers to teach a class she only pays $25/semester for her family to attend 3 hours of classes at our co-op. If her child attends one of our paid classes (there are only 3, guitar, art and Spanish) then she pays the teacher directly. For example, I pay $65/semester for my daughter to take an art class. I think the teacher is worth it.
This got us out of the sticky employee/IC situation with the IRS. I’m writing fewer checks. It made my job as treasurer a lot easier and no 1099-MISC forms at the end of the year. No one complained. The spirit of cooperation has returned. YEAH! I’ll also add that we let the volunteers decide what they wish to teach. If we cannot find a Spanish volunteer, no Spanish class is offered. If enough parents want Spanish we may see if a teacher can come to the co-op. We give her a room and she collects her fees from the parents directly.
My new book Paying Workers in a Homeschool Organization can help homeschool leaders understand the correct way to pay workers and volunteers in your homeschool group !
Carol Topp, CPA
Paying Workers in a Homeschool Organization-2nd edition
The private school where I have been teaching for six months recently closed its doors. Many students are displaced, and I was approached by parents to teach the students (5) in a homeschool co-op. My question is, what legal ramifications could there be if I collect cash for the task to complete the school year – three months?
Too bad about the school closing, but at least there is an opportunity for you.
The ramifications of teaching at a homeschool co-op include paying income taxes as either an employee of the co-op or as a self-employed independent contractor. Visit my Small Business page at my tax and accounting website, http://www.caroltoppcpa.com/SmallBusiness.html, for more information.
The parents need to be concerned about the homeschool laws in their state and any limits placed on non-parents doing the teaching. Here in Ohio, homeschool parents must notify the state on the annual notification form if someone other than a parent will do the teaching.
Carol Topp, CPA
How does a teacher become a coop teacher? I am a vetern teacher with lots of experience in science, history, and technology and I would like to homeschool my son, but the only way that I could afford this is to teach as well. Any ideas? Thanks!
Most homeschool co-ops use volunteer parents to teach their classes, but occasionally they hire a paid teacher. These are usually not full time positions. My co-op has a Spanish teacher, guitar and art teachers that are paid directly by the parents, but teach during our co-op time.
The hardest part might be finding a co-op in your area to hire you. Start by asking homeschool families in your area if they know of any co-ops and then call the director. Or visit my website http://www.HomeschoolCo-ops.com and go to More About Co-ops/Local Co-op List to search for a co-op in your area.
Carol Topp, CPA
[…] You will deal with the IRS if you become a 501(c)(3) tax exempt organization or pay workers. Since you mentioned that you are paying teachers, then you have required reporting to the IRS and to your state. You will have to pay payroll taxes (Social Security and Medicare) and file a W-2 if they are employees or file a 1099MISC if they are independent contractors. You should read this entry: “Paying co-op teachers is a sticky issue.” […]
I found homeschoolcpa.wordpress.com very informative. The article is professionally written and I feel like the author knows the subject very well. homeschoolcpa.wordpress.com keep it that way.
I purchased the ebook about Paying Workers. It is very helpful. I would like more information on how your co-op now pays teachers directly. Where can I find that information?
My co-op never paid teachers. They were volunteers or paid directly by the parents because they were “outside” teachers (i.e. not co-op members).
Our treasurer put a note on the bottom of each invoice telling families what they owed each teacher (we only had 4 paid teachers, so not every family was paying a teacher). That was very nice of her to do, but it is really the responsibility of the paid teacher to collect payment from each family. We, as the homeschool co-op, tried to stay out of the finances between the parents and paid teachers.
Carol Topp, CPA
Where can I find the IRS Guidelines for parents paying teachers directly? I am the Treasurer for a co-op and recently spoke with a nonprofit consulting firm about our tutorial class payments. Right now we have the parents pay the teachers directly but the consulting firm told me we need to pay the teachers as ICs since the co-op is facilitating these tutorial classes for our highschool students. I just want to make sure we are doing the right thing. Thanks!
Unfortunately, this guideline cannot not be found in a simple or direct manner in an IRS document or webpage. My statement that a homeschool program can have parents pay teachers directly comes from a letter an IRS employee wrote to one of my homeschool clients in 2006. I wrote about it in this blog post: https://homeschoolcpa.com/update-on-teachers-as-independent-contractors/
I’m glad you are seeking to get expert opinions and advice, but it’s difficult to know what to do when you are getting conflicting information. It’s becoming clearer to me that homeschool program have two choices: let the parents pay the teachers directly or pay the teachers as employees. What the nonprofit consulting firm recommends (paying the teachers as Independent Contractors) may not be the right thing either.
But I don’t know all the facts and circumstances of your situation. That’s why I started offering a worker determination service. I offer phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. 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. To request a consultation, please contact me. I’m happy to help and relieve any anxiety you have about this confusing topic.
My book Paying Workers in a Homeschool Organization may be helpful to you. I explain the difference between employees and independent contractors. I refer to several IRS guidelines for making worker determinations including this webpage: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
I hope that helps,
Carol Topp, CPA
Hi, has much changed in the last decade? Seems like this article and most comments are made from 2009-2011. I think more and more teachers are realizing they can work for themselves on their own schedule and with much more autonomy, flexibility & freedom all while being able to make more money. Is this something that is feasible and could possibly take over our antiquated model of education?