Taxes & Expenses

Started by ChrisL8 • 8 replies • 1949 views

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ChrisL8 (Rhode Island)
Posts: 4

Posted:

Hi,

New member here. I am trying to complete a 1120H form for my very small (2 unit) condo association. We generated $2400 in dues this year. All of these dues went towards association insurance and water/sewer charges for the individual units. I was hoping to be able to use the 1120H form but i am not sure i can consider the water/sewer charges as part of the 90% expenditure test as they went towards the individual units and not the association common property. Is there any way I can account for these on form 1120H or would I have to go through the trouble of filling out 1120. We're trying not to go through the expense of hiring a CPA for such a small association. Any help is appreciated.

Best Regards,
Chris

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

We used 1120-H and put the Sewer and Water under "C" and itemized it on page 2, SLine C. We have always done it that way. A CPA does our taxes.

ChrisL8 (Rhode Island)
Posts: 4

Posted:

Thanks for the response, it helps us out. What do you mean by page 2, I thought there was only one page to 1120h.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

I duno. My CPA itemized all the expenses by category on a second page. Such as Sewer, Water, etc. Then he took the total and put it in "C"

Maybe its his own page, maybe its an IRS page. The itemization and totals are the only thing on the page so maybe it is his.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Chris,

Is the assn resp. for payment of water & sewage or do the members reimb the assn? If the assn is resp. then it's an assn expense and would be counted toward the 90% requirement. But, didn't you also have water & sewage expenses for the common areas?

ChrisL8 (Rhode Island)
Posts: 4

Posted:

Since our association is so small being only two units the only common areas are the backyard and hallways so there is no water/sewer for those areas. However, the total water/sewer charges for the building including usage for the individual units are billed to the association and are paid for out of our monthly dues. Again, I appreciate everyone's help.

Best Regards,
Chris

MaryA1 (Arizona)
Posts: 7,043

Posted:

Chris,

I can't help but say, it seems like such a shame to have an HOA for only 2 units!

ChrisL8 (Rhode Island)
Posts: 4

Posted:

Ya i know, unfortunately it was already set up when we purchased. It's a condo conversion of a multifamily house. Strangely enough this is quite common in our area. Hopefully this tax filing won't be a huge deal as we don't have any taxable income anyways.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Chris,

In most cases, the only taxable income is interest earned on the reserve account (savings account or CD). In your case the $100 "specific deduction" should take care of that very nicely. Do you also have to file a state tax return. In AZ it's an automatic $50 tax.

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