Carol Topp, the Homeschool CPA is sometimes asked if a homeschool family can be a charity. Sometimes a homeschool spouse wants to set up a business and hire their spouse to homeschool their children.
Can this be done?
Are there tax breaks for doing this?
R.A. writes, “I would like some preliminary information on setting up a 501(c)(7). I would like to set up my homeschool (my wife and 3 kids) up as a charitable organization. We have been homeschooling for 12 years.”
Here’s Carol’s reply to these situations on today’s episode of the Homeschool Leader podcast.
- Can R.A. set up his family as a charitable organization?
- What’s a 501c3?
- What’s a 501c7?
- What’s the difference between a 501c3 and a 501c7?
- Why your family cannot be a nonprofit
- Why you shouldn’t hire your spouse to homeschool your children.
In the podcast, Carol referenced a few sources from the IRS:
A nonprofit tax exempt organization must serve a public good, not the private interests of the founder or his family. The IRS is very clear on this point. https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501c3-organizations
501c7 Social clubs must be formed for exempt purposes. Serving only your family is not an exempt purpose. See: https://www.irs.gov/charities-non-profits/other-non-profits/social-clubs
Carol has a few blog posts on this idea:
Incorporate yourself and write off homeschool expenses
Can my family’s homeschool be a nonprofit?
In the podcast I mentioned my book
The IRS and Your Homeschool Organization
Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?
I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:
- The benefits of 501c3 status
- The disadvantages too!
- What it takes to make the IRS happy
- What your state requires
- Why your organization should consider becoming a nonprofit corporation
- What is the difference between nonprofit incorporation and tax exemption
- IRS requirements after you are tax exempt
The webinar Create a Nonprofit for Your Homeschool Community is also helpful.