MikeJ8 (Illinois)
Posts: 45
Posts: 45
Posted:
Is it advisable to self prepare tax forms? It was suggested we save a few hundred dollars by self filing but the responsibility fell on me! Looks slightly confusing but I could get through it.
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Tax filing
Started by MikeJ8 • 8 replies • 1477 views
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BrianB (California)
Posts: 2,820
Posts: 2,820
Posted:
It all depends on how complex your HOA financial situation is. I self filed for ten years, but we had a small HOA, a simple savings/checking account and some CD's. A half hour work, and the form was done.
However, if you have a more complex system, with investments, interests, perhaps penalties, etc., or you can't get your hands on all the info, you may need a professional. My advice is to simply look at what has been filed over the past two or three years, and see how complex it looks, and how much info you have on hand.
However, if you have a more complex system, with investments, interests, perhaps penalties, etc., or you can't get your hands on all the info, you may need a professional. My advice is to simply look at what has been filed over the past two or three years, and see how complex it looks, and how much info you have on hand.
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By MikeJ8 on 03/04/2012 10:17 AM
Is it advisable to self prepare tax forms? It was suggested we save a few hundred dollars by self filing but the responsibility fell on me! Looks slightly confusing but I could get through it.
Is it advisable to self prepare tax forms? It was suggested we save a few hundred dollars by self filing but the responsibility fell on me! Looks slightly confusing but I could get through it.
If you're filing form 1120-H, which is what most HOAs are eligible to use, it should be fairly simple (even easier than an individual 1040 with itemized deductions on Schedule A). Form 1120-H comes with attached instructions.
SteveM9 (Massachusetts)
Posts: 3,699
Posts: 3,699
Posted:
Look at previous year's forms. If nothing has changed, use the same (updated) forms and just change the figures. If you have a simple HOA, filing yourself is easy. If you have special situations, you may need to just spend the money.
MikeJ8 (Illinois)
Posts: 45
Posts: 45
Posted:
We are a small HOA with a small landscape maintenance budget. The form looks fairly simple except for one item. How are funds transfered to reserve reported? We had an issue where we were left with a substancial portion of the budget left over and had to transfer to reserve to be spent this year.
The 1120-H is not too clear on how to report the reserve funds. Thank You
The 1120-H is not too clear on how to report the reserve funds. Thank You
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Mike,
You don not report the amount transferred to reserves.
Lines A-E are not used in computing taxes. These lines are used to determine your eligibility to file Form 1120-H.
Line B - Enter exempt function income (this is usually just what you collect in assessments from you homeowners during the year).
Line C - Total expenditures to maintain your common elements (includes lawn care and other direct expenses, insurance (liability, D&O), bank fees, fees paid to property managers, accountants, lawyers, etc. as long as it is related to the association's real estate). Do NOT include money you transferred to reserves; only actual expenses.
Line D - The amount on line C plus any expenditures not related to the association's property. Often, line D equals line C. If line C is less than 90% of line D you cannot use 1120-H.
Gross Income (lines 1-8)income received from other sources other than assessments (dues). Usually, this consists of interest and dividends on deposits, certain special use fees and rentals, income from sources other than homeowners.
Deductions includes those expenses related to the production of the gross income in lines 1-8. Deductions do not include the expenses you reported on Line C. Examples of what might be reported here would be the cost of special permits to hold some fund-raising event, brokers fees paid for investment accounts, etc. If you have no non-exempt function income (line 8 is $0), you should also have no deductions to report here.
You don not report the amount transferred to reserves.
Lines A-E are not used in computing taxes. These lines are used to determine your eligibility to file Form 1120-H.
Line B - Enter exempt function income (this is usually just what you collect in assessments from you homeowners during the year).
Line C - Total expenditures to maintain your common elements (includes lawn care and other direct expenses, insurance (liability, D&O), bank fees, fees paid to property managers, accountants, lawyers, etc. as long as it is related to the association's real estate). Do NOT include money you transferred to reserves; only actual expenses.
Line D - The amount on line C plus any expenditures not related to the association's property. Often, line D equals line C. If line C is less than 90% of line D you cannot use 1120-H.
Gross Income (lines 1-8)income received from other sources other than assessments (dues). Usually, this consists of interest and dividends on deposits, certain special use fees and rentals, income from sources other than homeowners.
Deductions includes those expenses related to the production of the gross income in lines 1-8. Deductions do not include the expenses you reported on Line C. Examples of what might be reported here would be the cost of special permits to hold some fund-raising event, brokers fees paid for investment accounts, etc. If you have no non-exempt function income (line 8 is $0), you should also have no deductions to report here.
MikeJ8 (Illinois)
Posts: 45
Posts: 45
Posted:
Great info, it makes sense now.
JeanI (Louisiana)
Posts: 112
Posts: 112
Posted:
Be safe, hire a CPA to prepare and file the tax forms. He/she will be liable for any mistakes/errors etc. JMI
RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
Quote:
Posted By MikeJ8 on 03/04/2012 10:17 AM
Is it advisable to self prepare tax forms? It was suggested we save a few hundred dollars by self filing but the responsibility fell on me! Looks slightly confusing but I could get through it.
Is it advisable to self prepare tax forms? It was suggested we save a few hundred dollars by self filing but the responsibility fell on me! Looks slightly confusing but I could get through it.
MikeJ, it may take time to review the 60% and 90% rules. It is so simple that we complete the form at no cost for our client HOAs. Takes me about 5 minutes for 1120-H and another 5 for Colorado form 112. It would take me longer to provide the data to a CPA and a CPS would charge the HOA several hundred dollars.
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