The IRS and Your Homeschool Organization
By Carol Topp
()
About this ebook
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?
The answers are in this book: The IRS and Your Homeschool Organization.
The information will be helpful to homeschool support groups, co-ops, music and sports groups and will help you to 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 What is the difference between nonprofit incorporation and tax exemption
IRS requirements after you are tax exempt
Also covered are non profit incorporation, the application process, and how to maintain tax exempt status.
Written specifically for homeschool groups.
Author Carol Topp is a CPA and and homeschooled her daughters, both homeschool graduates for 14 years. She now helps homeschool leaders obtain tax exempt status for their organizations.
Carol Topp
I’m Carol Topp a CPA (Certified Public Accountant) specializing in tax preparation, small/micro business accounting, and nonprofit accounting. I work from my home office in Cincinnati Ohio. I also enjoy public speaking, writing magazine articles and helping nonprofit organizations.
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The IRS and Your Homeschool Organization - Carol Topp
The IRS
and
Your Homeschool Organization
Tax Exempt 501(c)(3) Status For Homeschool Organizations
By Carol L. Topp, CPA
Copyright © 2011 by Carol L. Topp, CPA
All right reserved
ISBN-13: 978--1-4659-8199-8
BISAC: Education / Home Schooling
No part of this book may be reproduced without written permission of the author except for brief quotations and for reviews
Smashwords Edition, License Notes
This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.
Disclaimer and Limitation of Liability
This book is designed to provide accurate and authoritative information about the subject matter covered. The author is not rending legal, accounting, or other professional advice. Any tax advice contained in this book was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Furthermore, this book was not intended or written to support the promotion or marketing of any of the transactions or matters it may address.
Please visit www.HomeschoolCPA.com or e-mail the author at Carol@HomeschoolCPA.com
Table of Contents
Introduction
Chapter One: The IRS and Homeschool Organizations
Homeschool Contact With The IRS
Government Intrusion into Homeschoolers' Lives
Historical Perspective on Charities and Taxes
Does Tax Exempt Status Limit Homeschool Freedoms?
Chapter Two: What Does 501(c)(3) Mean?
Definition
Support Groups
Comparison of 501(c)(3) Qualified Charity and 501(c)(7) Social Club
What if We’re Not a Charity?
Can My Homeschool Be Tax Exempt?
Chapter Three: Benefits and Costs of Tax Exempt Status
Common Non Profit Forms
Benefits of 501(c)(3) status
Disadvantages 501(c)(3) status
Chapter Four: Alternatives to 501(c)(3) Status
File for 501(c)(3) Qualified Charity Status
Determine Eligibility of Other Tax Exempt Status with the IRS
Reorganize Your Group to Stay Small
Pay Taxes
How to Decide What to Do
Chapter Five: What Does Your State Require?
Secretary of State’s Office
Attorney General's Office
Department of Revenue
Chapter Six: 501(c)(3) Status: What Is Involved?
Are You Ready?
Writing a Mission Statement
Establishing a Board of Directors
Writing By Laws
Chapter Seven: Nonprofit Incorporation: Do You Need It?
What is Incorporation
Do You Need to Incorporate?
What Does Incorporating Involve?
Choosing Your Name Carefully
Seven Great Reasons to Incorporate
Chapter Eight: Check List for Homeschool Organizations Seeking 501(c)(3) Tax Exempt Status
Chapter Nine: The Application Process
IRS Form 1023
Narrative
A Board and Bylaws
Financial Statements
Chapter Ten: We’re Tax Exempt! Now What?
Annual Reporting to the IRS and Your State
Unrelated Business Income Tax
Disclosure Requirements
Donations
Political limitations
Conflict of Interest
Chapter Eleven: Resources
Appendices
Sample Mission Statements
Sample Bylaws
Sample Articles of Incorporation
Sample Conflict of Interest Policies
About the Author
***
Introduction
As the homeschooling movement grows, so do our support groups, co-ops, music and sports programs! This growth means more organization and more structure and needed for homeschool groups.
Perhaps your group has grown and your are wondering if you have any obligation to the IRS. Perhaps your board is asking about being officially recognized as a nonprofit organization. You’ve heard terms like ‘nonprofit,’ ‘tax-exempt’ and ‘501(c)(3).’ Do you understand what they mean?
You may wonder what nonprofit status might mean for your group-good and bad. What are the benefits? What will it cost in dollars and time? Is it needed? Is your group ready?
This book will help you sort out the decisions you need to make. I will discuss the different types of homeschool groups and when they need to worry about taxes and the IRS. I'll explain the pros and cons of being a nonprofit corporation and obtaining 501(c)(3) tax exempt status.
Unlike other books on this subject, I am writing specifically to homeschool organizations. I know how they operate and understand their mission. I also know what it is like to be a homeschool leader. You want clear answers and don’t have time to read a lot of books or websites. You have no desire to become an expert in nonprofit law because your just want to run a program that benefits homeschooling families.
My goal in this book is to clear the confusion and offer practical assistance. I hope you find it helpful.
Carol Topp, CPA
Cincinnati, Ohio
***
Chapter One: The IRS and Homeschool Organizations
I'm a homeschool leader and I'm wondering if my group is supposed to be paying taxes to the IRS.
What happens when a homeschool group makes a profit? Do they owe taxes? Is there paperwork with the IRS? Should we hire an accountant?
Homeschool leaders frequently ask questions like the ones above. They are concerned about paying taxes and filing forms, but unlike personal income taxes, homeschool leaders are in unfamiliar territory. They are unsure if their homeschool group is a business or a nonprofit organization and question whether being a nonprofit means they do not owe any taxes. Leaders wonder what their involvement should be with the Internal Revenue Service (IRS).
Homeschool Contact With The IRS
There are several situations when a homeschool organization should be in contact with the IRS:
Your homeschool group opens a checking account and needs a tax identification number.
Usually the first contact a homeschool organization has with the IRS is getting an Employer Identification Number (EIN). Most banks now request an EIN when a group opens a checking account. An EIN is similar to a Social Security Number for a business or nonprofit organization. They are available from the IRS at no charge at ww.irs.gov.
Your homeschool group pays a worker.
Your worker may