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Nonprofit Law/tuition discount and 1099

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Question
QUESTION: A 501(c)(3) non-profit school offers tuition discounts to families in financial need. The parents that receive the tuition discounts volunteer time at the school performing miscellaneous jobs - cleaning, etc.  Do these parents need a 1099 reporting the tuition discount?

ANSWER: I don't understand why the parents are working at the school.  Is it because they expect to only receive the tuition discount if they work?  It appears so from the way that you explained it.  Let me know. After you give me that information I will reply further.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    



---------- FOLLOW-UP ----------

QUESTION: The school is a family cooperative.  The only employees of the school are the teachers and administrator.  All of the families in the cooperative perform all of the other work to operate the school.  Families receiving tuition discounts commit to fulfilling specific tasks/needs for the school year.

Answer
The IRS has instructed
"Do not use Form 1099-MISC to report scholarship or fellowship grants. Scholarship or fellowship grants that are taxable to the recipient because they are paid for teaching, research, or other
services as a condition for receiving the grant are considered wages and must be reported on Form W-2.
www.irs.gov/instructions/i1099msc/ar02.html#d0e311

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

Nonprofit Law

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Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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