What, specifically, can you deduct on IRS Form 1120-H

Started by LauraR2 • 5 replies • 4555 views

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LauraR2 (West Virginia)
Posts: 41

Posted:

As you may know from some of my recent posts, I am an officer in a POA trying to get its act together. Can we count the following expenses towards the 90% test on IRS Form 1120-H?:

1. Landscaping fees paid to a private person (we do NOT have an invoice for this)
2. Federal taxes and state corporation licensing fees
3. Late fees on taxes last year

Thanks!

LauraR2 (West Virginia)
Posts: 41

Posted:

I just want to bump this up to see if anyone can help. I am mostly concerned about whether we can count the taxes and late fees paid as part of our 90%. I spoke to the IRS today and and the lady said we do NOT have to have an invoice for the mowing work- a cancelled check would be sufficient.

RogerB (Colorado)
Posts: 5,067

Posted:

Laura, of course you can. All HOA related expenses qualify for the 90% rule. Expenses outside the HOA would be things such as upgrading an entrance which is not owned by the HOA. Attached are examples of deductions which apply to the taxable income. Taxable income is income derived outside the HOA; assessments, fines, insurance reimbursements, and similar income is not taxable income.

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LauraR2 (West Virginia)
Posts: 41

Posted:

THANK YOU! Just to make sure I understand, when we charge a $10 late fee when someone is late paying their road maintenance fees, it is taxable?

RogerB (Colorado)
Posts: 5,067

Posted:

No Laura, none of the income generated internally in your HOA is taxable. Only income which is generated outside the HOA is taxable. This includes interest on CDs, club house fees, greens fees, and other such income. If you do not understand the 1120-H instructions I suggest you hire a professional to help the first time.

LauraR2 (West Virginia)
Posts: 41

Posted:

Thanks again- when I read the earlier post my eyes must have skipped the word "not" in this sentence: "...assessments, fines, insurance reimbursements, and similar income is not taxable income."

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