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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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7:15 AM, Nov. 15, 2007
Can my family's homeschool be a nonprofit?
(view similar articles on Homeschooling)
Homeschool CPA was recently asked,
I see several articles (on your website www.HomeschoolCPA.com) on setting up as a not-for-profit for homeschool organizations (e.g. homeschool co-ops), but I wonder if I could set my own family's homeschool up as a non-profit. We're in Texas, so we are considered a private school.
-Lauren in TX Lauren,
You asked a good question and I've been asked it before in different ways. Nonprofit organizations have a lot of benefits including tax free income, discounts, and sometimes pay no sales tax!
I'm not a lawyer, nor familiar with Texas private school laws, but I'll try to explain how I see things.
Briefly, a nonprofit organization exists to serve a group, not an individual. The IRS will not grant "recognized charity", 501c3 tax exempt status to a group that is formed solely to benefit the founder's family. A tax exempt organization must serve a public good. The IRS forbids private "inurement" in 501c3 tax exempt organizations. Inurement means to be beneficial or advantageous. Inurement occurs when an organization is formed or operates with an incorrect charitable purpose that allows individuals in control to profit from the organization. 501c3 organizations can lose their tax exempt status for practicing inurement.
Inurement/Private Benefit - Charitable Organizations
A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization.
>From the IRS website at http://www.irs.gov/charities/charitable/article/0,,id=123297,00.html
So, in short the answer is "No", even if your state classifies a homeschool as a private school. That's how I see it. Anyone care to comment?
Carol
Now, here are my "lawyer words..."
Any tax advice contained in this communication (including any attachments, enclosures or other accompanying materials) 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 communication was not intended or written to support the promotion or marketing of any of the transactions or matters it may address.
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This is very interesting information. While I can see where Inurement/Private Benefit conflicts with a family being non-profit, it is too bad that homeschool families are not recognized as private schools.That is what they really are - an organization that exists to serve a group that also - moreso than public schools usually do - serves a public good.
Found you through the Carnival of Homeschooling at HomeschoolBuzz.com
blessings, J
Posted by JacqueDixonSoulRestES on Nov. 20, 2007 at 3:15 PM
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Thank you
