DianeW (Maryland)
Posts: 147
Posts: 147
Posted:
How many of your HOA's file tax returns? If you don't, why not? Our HOA has never filed and is under the impression that one is not required. Just wondering what other HOA's do.
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Tax Returns
Started by DianeW • 21 replies • 7321 views
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JaimeW (North Carolina)
Posts: 24
Posts: 24
Posted:
I work for an Association Management Company in North Carolina and have talked to numerous CPA's regarding the filing of tax returns for HOA's. We have been told that in North Carolina a State and Federal Tax Return must be filed each year whether the Association has taxable income or not. I don't know if it varies based on the state.
DianeW (Maryland)
Posts: 147
Posts: 147
Posted:
I would agree with you but our association was told years ago one was not needed. Now I am treasurer and have found one accountant who says no and one who says yes. I tend to believe the yes firm although this certainly opens a huge can of worms since the hoa has been in existence for over ten years. We could be talking about thousands of back taxes in tax, interest, and penalties. The one firm that said no said that all income including interest on saved monies for road repairs etc is exempt. The other firm said that all interest is taxable but not dues. Amazing how you can get such various replies. I did go to the IRS website for form 1120-H and feel it should be filed.
JaimeW (North Carolina)
Posts: 24
Posts: 24
Posted:
Diane,
At one point we were told taxes did not have to be filed so we went to several CPA's and they told us it did. I also did research on the internet regarding Associations and tax returns and the website I found also stated that the tax returns had to be filed. The interest on cd's and reserves is taxable and would be what taxes would be paid on.
If you are talking to CPA's make sure it is one that has done Association tax returns before. You don't want someone who is new to doing them or has never done them before. In North Carolina we have CPA's that only deal with Association Tax Returns.
At one point we were told taxes did not have to be filed so we went to several CPA's and they told us it did. I also did research on the internet regarding Associations and tax returns and the website I found also stated that the tax returns had to be filed. The interest on cd's and reserves is taxable and would be what taxes would be paid on.
If you are talking to CPA's make sure it is one that has done Association tax returns before. You don't want someone who is new to doing them or has never done them before. In North Carolina we have CPA's that only deal with Association Tax Returns.
LisaS (Illinois)
Posts: 341
Posts: 341
Posted:
I would believe that yes, you must file a return. You have income, whether it is taxable or not. In thew simplest terms- income must be reported.
Our association is farily new. We do not have any taxable income, but a conversation with the IRS confirmed that we must file. I had called to ask as our developer had just turned over the association in 10/04, and we were unsure of how that affected our tax situation. I am not a CPA, but I filed our return and it was very simple. (we are 300 single family homes, no monthly maintenace fees except landscaping)
Good Luck!
Lisa
Our association is farily new. We do not have any taxable income, but a conversation with the IRS confirmed that we must file. I had called to ask as our developer had just turned over the association in 10/04, and we were unsure of how that affected our tax situation. I am not a CPA, but I filed our return and it was very simple. (we are 300 single family homes, no monthly maintenace fees except landscaping)
Good Luck!
Lisa
DianeW (Maryland)
Posts: 147
Posts: 147
Posted:
I did find a firm that does hoa tax returns and they did ours for 2004 with only a small tax due of a few hundred dollars. The problem is that since no tr's have ever been filed, the cpa feels IRS will come back to us for a LOT of back money. Yuk! So all you hoa's out there - file your returns!
JimB4 (Montana)
Posts: 2
Posts: 2
Posted:
Our HOA will be filing a tax return (1120H) for the first time this year, although we should have been filing for many years (got some bad advise some time back). Should we be proactive about dealing with past years, or should we just wait for the IRS to come to us? If we should be proactive, what action do we take?
DianeW (Maryland)
Posts: 147
Posts: 147
Posted:
I became treasurer in 2005 and our HOA had never filed returns previously because of bad advice. After I researched the issue, I did go to an accountant who helped me file a return for 2004. Unfortunately, by the time this was done, it was September. At this time, the IRS has only come back with a delinquent tax for filing late. Our accountant did recommend addressing the prior years, but we did not. That's my 2 cents on what our HOA did - good luck!
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Diane:
We file every year.
We file every year.
FrankD2 (New Jersey)
Posts: 58
Posts: 58
Posted:
DIANE
YOU FILE A 1120H TAX RETURN. ALL INCOME NOT DIRECTLY CONNECTED IN
MANAGING THE HOQ IS TAXABLE. SUCH AS CD INTEREST, RENTS, ADVERTISING INCOME. HOWEVER EXPENSES DIRECTLY CONNECTED IN OBTAINING THIS INCOME
ARE DEDUCTABLE.
YOU FILE A 1120H TAX RETURN. ALL INCOME NOT DIRECTLY CONNECTED IN
MANAGING THE HOQ IS TAXABLE. SUCH AS CD INTEREST, RENTS, ADVERTISING INCOME. HOWEVER EXPENSES DIRECTLY CONNECTED IN OBTAINING THIS INCOME
ARE DEDUCTABLE.
FrankD2 (New Jersey)
Posts: 58
Posts: 58
Posted:
DIANE
YOU FILE A 1120H TAX RETURN. ALL INCOME NOT DIRECTLY CONNECTED IN
MANAGING THE HOQ IS TAXABLE. SUCH AS CD INTEREST, RENTS, ADVERTISING INCOME. HOWEVER EXPENSES DIRECTLY CONNECTED IN OBTAINING THIS INCOME
ARE DEDUCTABLE.
YOU FILE A 1120H TAX RETURN. ALL INCOME NOT DIRECTLY CONNECTED IN
MANAGING THE HOQ IS TAXABLE. SUCH AS CD INTEREST, RENTS, ADVERTISING INCOME. HOWEVER EXPENSES DIRECTLY CONNECTED IN OBTAINING THIS INCOME
ARE DEDUCTABLE.
JosephW (Michigan)
Posts: 882
Posts: 882
Posted:
REPEAT AFTER ME-----ALL ASSOCIATIONS THAT COLLECT ASSESSMENTS HAVE TO FILE TAX RETURNS!!!!! You have to account to them for the money, Federal, State and sometimes local. This doesn't mean you will owe any tax, but you have to file the returns.
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GeraldJ (Tennessee)
Posts: 6
Posts: 6
Posted:
GloriaM (North Carolina)
Posts: 829
Posts: 829
Posted:
Jim:
Yes, be proactive and file your past 1120's. Every HOA in every State (the IRS is a Federal Agency) must file, profit or not. 1120's are a coporate form, HOA's are incoporated in the state.
Yes, be proactive and file your past 1120's. Every HOA in every State (the IRS is a Federal Agency) must file, profit or not. 1120's are a coporate form, HOA's are incoporated in the state.
RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
Jim, I would file 1120-H and your state corporation tax this year and wait.
JimB4 (Montana)
Posts: 2
Posts: 2
Posted:
Roger,
Why do you suggest waiting?
Why do you suggest waiting?
BW (Colorado)
Posts: 28
Posts: 28
Posted:
Now that we know our Association must file a federal and state income tax return does anyone have a recommendation for an accountant familiar with homeowner association? We are located in the south Denver, Colorado area? Thank you for any, and all
RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
Yes BW. Give me a phone call.
KentS (Maryland)
Posts: 12
Posts: 12
Posted:
Condominiums have the option of filing an 1120 or a 1120H, and there may be significant differences in which form you choose, so do the numbers before choosing the form you wish to use.
BradD2 (Florida)
Posts: 418
Posts: 418
Posted:
I would contact your Property Appraiser and County Tax Collector and find out if you owe back taxes for your community property as well. I learned yesterday that the Association has not paid property taxes since 2003 on property I didn't know we owned. In addition the mailing address is listed as being our first management company and is no wonder we never saw the bill.
BarbaraS (New Mexico)
Posts: 49
Posts: 49
Posted:
Our BOD applied to the IRS for an EID (employer's identification number). We were told that this number is appropriate even though the HOA does not have employees. We file the 1120-H every year - very simple. By calling the state treasury department we found that our state (NM) does not require HOA's to file a return.
BarbaraS (New Mexico)
Posts: 49
Posts: 49
Posted:
Our HOA also had not filed a return in twenty years! The developer left us, and there had not been an operating BOD since. We have since formed a five-member BOD and applied for the EID, putting the current date as the date of formation. We file every year. We have only maintenance fees as we have no "facilities" - everything coming in goes into existing maintenance, there is no interest accumlated.
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