Does Your HOA File a Federal Tax Return?
If your homeowners’ association is a non-profit corporation, you may think that it is immune to having to pay taxes. However, very few HOAs qualify for a tax exempt, 501 (c) status; leaving the majority of community associations with the obligation of paying tax on their non-exempt income. If you are a volunteer leader for a small, self-managed community, there is a good chance that your HOA does not utilize the services of a CPA on a regular basis. As a result, you may be wondering… “hmmm… I don’t think our community filed a tax return last year. Do I really need to do this?” The answer, according to the federal government, is “yes”.
Just because the previous board may have failed to submit a tax return does not absolve you of the responsibility of filing one this year, and you may be asked to submit returns for the previous years as well. Your federal tax return is due 75 days after the close of your tax year. For HOAs that operate on a calendar year, your tax return must be filed on or before March 15th.
Regardless of the size of your community, it’s non-profit status, or lack of income from anything other than assessments, all homeowners’ associations should file the required 1120-H tax return. Assessments and fees paid by members are not taxable, but interest income and any income paid to the association by non-members is taxable. So what if your community has neither? The lack of taxable income does not eliminate your need to file. You must file every year.