1120-H Previous year's Taxes

Started by JeffB21 • 6 replies • 143 views

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JeffB21 (Washington)
Posts: 22

Posted:

Greetings,

We're a small HOA and last year our tax person took the amount of the previous year's taxes paid as a deduction against taxable income. Is this correct?

Thanks

ElleN (Idaho)
Posts: 1,334

Posted:

Quote:

Posted By JeffB21 on 01/21/2026 12:24 PM
We're a small HOA and last year our tax person took the amount of the previous year's taxes paid as a deduction against taxable income. Is this correct?

The previous year's federal income taxes are not deductible on the current year's tax returns.

The cost of preparing the tax returns is a deductible expense.

Make sure you are reading the tax return correctly.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By JeffB21 on 01/21/2026 12:24 PM
Greetings,

We're a small HOA and last year our tax person took the amount of the previous year's taxes paid as a deduction against taxable income. Is this correct?

Thanks

You need a new tax person because the one you have been using is clueless.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jeff,

It is certainly an option.

Are you filing form 1120 or form 1120-H?

With form 1120-H, typically, the only income you would pay taxes on is the interest earned on your bank accounts. I've never seen a refund occur with Associations that file form 1120-H.
This form is, generally, easily filled out without the use of an accountant.

With form 1120, taxes become complicated and you may actually need an accountant to properly file.

Hence, is your Association filing form 1120 or form 1120-H?
If your Association is filing form 1120, why?

JeffB21 (Washington)
Posts: 22

Posted:

Thanks for your reply Tim.

We use the 1120-h form, the form we've used for the past several years.

It all started in 2024 when we earned dividends that exceeded the $100 deduction. Never before had this occurred. BTW: it occurred again in 2025.

Our preparer, a CPA working for a national tax preparer, entered the amount of tax paid on our 2024 return as a deduction on line 15 on our 2025 return.

I questioned her about this and she's certain this is AOK.

I like that it reduces our taxes by a few hundred bucks but I'm still wondering.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Jeff,

Take the following to your CPA: Instructions for Form 1120-H (2025)

Per the instructions [emphasis added]:

Line 12. Taxes and licenses.
Enter taxes paid or accrued during the tax year, but not the following:
Federal income taxes.

For more info on form 1120-H, see: About Form 1120-H, U.S. Income Tax Return for Homeowners Associations

JeffB21 (Washington)
Posts: 22

Posted:

Tim,

LOL Were you listening to our conversation?

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