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| Author |
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DavidT3
(Texas)
Posts:18
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| 05/13/2008 6:49 AM |
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I posted last week about inheriting a mess when I was elected president of our HOA. Our HOA started in September 2002 and we had not filed taxes since then. Gathered up all our financial information and had the paperwork filled out. Here's the kicker......that first year (Sept - Dec 2002) we collected and deposited dues from all properties (approx. $5000), however we only had 3 expenditures (3 electric bills = $40). That got us. Owe around $850 for that year. Owe $200 for another year that our expenditures did not come close to our deposits. Owe nothing for the other years. So, to summarize, we owe around $1100 for 6 years of unfiled tax returns (doesn't include any late fees that may be assessed). Moral of the story......if the developer turns over control of your HOA to you late in the year, do not collect dues or deposit them until January 1st of the next year. It will get you when you file your tax forms!!!
Thanks to all who helped answer my questions and lead me in the right direction last week.
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MaryA1
(Arizona)
Posts:1888
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| 05/13/2008 7:46 AM |
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David,
Did you have a CPA file these tax returns? I seem to recall the excess income (profit) can be deposited into the reserve fund at the end of the year so it is not taxable. I believe the members have to agree to this by vote. Since you were filing prior years' taxes, you probably couldn't make this adjustment, but it's good to know for future years. |
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DavidT3
(Texas)
Posts:18
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| 05/13/2008 7:53 AM |
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| Yes and that is what she said |
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RogerB
(Colorado)
Posts:3656
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| 05/13/2008 8:01 AM |
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| David, I doubt you owe anything unless you had yearly outside income of over $100 from such things as interest. |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150 
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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SusanW1
(Michigan)
Posts:1804
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| 05/13/2008 1:51 PM |
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David - is your group a not for profit corporation, or are you a home association?
You should have revenue that covers your expenditures, with a small emergency fund left over to carry you thru the first three months of the next year. With such little expenditures, then you can lower the dues OR start spending for the good of the community!!! You can not keep it in a savings if it is not designated for use, like a Reserve Fund.
You don't mention a Reserve Fund. Since you have utility bills, what are they for? Are you caring for any common grounds, buildings, entrance signs, lawn maintenance, resident program??? WHY do you exist???
As an HOA and as small as you are, you should not be paying ANY taxes. You need to estabish a Reserve Fund, by motion, at a meeting and get a plan for repairs/replacements.
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