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I am a homeschooling mother and Certified Public Accountant (CPA) combining my experience and knowledge to help homeschool organizations such as co-ops, support groups, music and sports programs. HomeschoolCPA answers questions from homeschool leaders on many topics such as nonprofit status, liability, paying teachers, tax exempt status and taxes.
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3:56 PM, Sep. 9, 2006
Is your homeschool group's hired teacher really an employee?
(view similar articles on Non Profit Organizations)
A homeschool nonprofit I work with
called me this week quite frantic. They had received a letter
form the IRS. It seems that a former teacher of one of their
classes was asking for an examination of her status as an
independent contractor. (using IRS Form SS-8)
She thought that she should be classified as an employee of this
homeschool nonprofit. If the IRS agrees with this worker, the
homeschool organization may have to pay back taxes (Social Security and
Medicare) and perhaps penalties.
Fortunately this homeschool group did many things right:
1. They had all their paid teachers sign a Independent Contractor Agreement.
2. They did not control the content of the class, nor dictate to the teacher what curriculum she must use.
3. They offered no benefits to teachers.
4. They did not train their teachers.
How about your homeschool group? Would you pass an IRS
examination? Do your hired teachers sign an Independent
Contractor agreement? Do you avoid controlling their work as you
might an employee? Here's a helpful brochure regarding employee or independent contractor status (IRS Pub 1779).
I've written about Independent Contractor status for coaches and refs in a soccer league here and here.
Carol
Update to this blog entry here (Find out what the IRS determined and what this homeschool organization is doing next)
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