Does Your HOA File a Federal Tax Return?

Posted on January 26, 2009. Filed under: Finances | Tags: , , , , , |

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.


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5 Responses to “Does Your HOA File a Federal Tax Return?”

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Typically which board member’s responsiblity is it to file the required state paperwork?

Great site for a novice. Thanks

We are a small struggling HOA with less that half owners paying. Haven’t filed our returns for three years (not intentionally). Will we be fined and are we in trouble with IRS

Our HOA had a small profit from rental of the community center for parties, etc. We have had NOLs the previous 3 years. Can we carryforward the NOLs? Can you explain Rule 70-604 that says the IRS can treat this income as a “constructive return of capital to members”, and use this income as an offset against future losses.

I own a condo where the HOA was never properly
established. A man who owns a tax company has been
collecting the dues and paying the bilss but has no tax id
number. He and the other owner want me to manage the
HOA from here out but I do not know how to deal with
the past six years as far as taxes go.

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    Whether you are a homeowner or a community board member, a degree of reasonableness will go a long way.


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