When it comes to filing taxes for an HOA, it may seem complicated. Really, HOA taxes are pretty simple: HOAs must always file federal taxes.
Is An HOA a Non-Profit?
Yes and no.
The confusion on this can arise from the fact that HOAs operate as non-profit corporations. This is because the IRS recognizes the HOA’s value but still considers it to be a corporation that happens to operate without a profit motive since its goal is to simply manage the community. The IRS has even been so kind as to create a unique form specifically for the complicated nature of HOAs – the 1120H.
Does An HOA Pay Taxes?
Yes, an HOA must still pay taxes on incidental income.
The 1120H form just for HOAs does not mean that HOAs are exempt from having to pay taxes to the Federal Government. Incidental income that the HOA has earned throughout the year will still be taxed. This includes things like bank account interest, as well as fees for using community assets like renting out tennis courts and basketball courts.
We Can Take Care It for You
With Your Community Manager, we make sure that our HOAs have their taxes in order and filed appropriately through a CPA firm. This alleviates all confusion surrounding the taxes for an HOA and ensures they get done correctly and on time.