Checking accounts and EINs for homeschool groups

Carol,

We have always had a checking account under a parent’s name. We were adding a name to our account this year when (the bank) informed us we can no longer do this and we need to have our own Tax ID number. Will we need to file returns with the IRS if we get a tax ID number?

I strongly discourage using a parent’s name on an organization’s checking account. The organization should have a checking account in its own name and use an Employer Identification Number (EIN), not an individual’s social security number.

Getting an EIN from the IRS does not necessarily mean your organization will have to report income to the IRS. If you are a small nonprofit organization with annual gross revenues under $5,000, there are usually no reporting requirements to the IRS at all.

Nonprofits have to start filing tax forms when they

  • bring in more than $5,000 a year
  • become a 501(c)(3) tax exempt organization
  • do public solicitations (i.e. door-to-door selling or fund raising)
  • pay workers either as employees or independent contractors

Money_thumbnailIf you hire and pay workers, your organization will use the EIN to file either 1099MISC or W-2 forms for each worker.

Read more about hiring and paying workers in my ebook, Money Management for Homeschool Organizations here

Carol Topp, CPA

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