VictorB4 (Maryland)
Posts: 1
Posts: 1
Posted:
Is the Interest earned on investments in Reserve Accounts subject to Federal or state (in my case Maryland) Taxes?
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Reserve Interest Tax Implications
Started by VictorB4 • 2 replies • 385 views
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AidylP1 (California)
Posts: 173
Posts: 173
Posted:
Yes
TimB4 (Tennessee)
Posts: 21,062
Posts: 21,062
Posted:
Under federal form 1120-H, typically used for HOA/COAs filing of federal income taxes, interest earned would be taxable income.
Basically, non-exempt income (income other then from assessments) are taxed in form 1120-H. In addition to interest (mentioned above), any dividends, capital gains and usage fees (per use charges for common amenities) would be taxable.
As for Maryland taxes, I can not say.
Some resources:
Community Association Federal Tax Return: Form 1120 vs. Form 1120-H from an attorney site
Instructions for Form 1120-H (2022) from the IRS website
Basically, non-exempt income (income other then from assessments) are taxed in form 1120-H. In addition to interest (mentioned above), any dividends, capital gains and usage fees (per use charges for common amenities) would be taxable.
As for Maryland taxes, I can not say.
Some resources:
Community Association Federal Tax Return: Form 1120 vs. Form 1120-H from an attorney site
Instructions for Form 1120-H (2022) from the IRS website
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