MarshallJ (Florida)
Posts: 1
Posts: 1
Posted:
We would like to know if donating money to an HOA is deductible on income tax for the donee?
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donation of cash to HOA.
Started by MarshallJ • 24 replies • 6383 views
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MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
NO it is not considered a "charitable contribution". A HOA is a different type of non-profit corporation that donations of money or items are not tax deductions. Hence why having a rummage sale or bake sale to raise money for the HOA, isn't a good idea. That money raised may be taxable depending on the amount raised. It has to be reported on the HOA's taxes.
I am sure others with more extensive accounting experience and knowledge can elaborate on the details. However, the answer is NO. However, if taxes will be paid on the money, then maybe...
I am sure others with more extensive accounting experience and knowledge can elaborate on the details. However, the answer is NO. However, if taxes will be paid on the money, then maybe...
Former HOA President
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Quote:
Posted By MarshallJ on 11/19/2011 1:06 PM
We would like to know if donating money to an HOA is deductible on income tax for the donee?
We would like to know if donating money to an HOA is deductible on income tax for the donee?
I would like to hear from either an accountant or tax attorney on this...I don't know but think it might be
JohnM48 (Pennsylvania)
Posts: 89
Posts: 89
Posted:
Quote:
Posted By BradP on 11/19/2011 3:13 PM
Posted By MarshallJ on 11/19/2011 1:06 PM
We would like to know if donating money to an HOA is deductible on income tax for the donee?
We would like to know if donating money to an HOA is deductible on income tax for the donee?
I would like to hear from either an accountant or tax attorney on this...I don't know but think it might be
Brad,
I've owned a tax accounting firm for about 35 years. "Donations" to an HOA is NOT tax deductible as HOA's are not recognized charities. In order for a donation to be tax deductible, the receiving organization must be recognized by the IRS as a bona fide charity. Since an HOA exists solely for the benefit of its members, it does not qualify as a charity.
HTH
Association President
PetunkaM (Florida)
Posts: 1,009
Posts: 1,009
Posted:
John,
Please let me ask you a question. I am – as a BOD member- to receive a $1K fee/per year for my service (voted by a membership) But, I do not want to that money. Is that considered a donation?
Please let me ask you a question. I am – as a BOD member- to receive a $1K fee/per year for my service (voted by a membership) But, I do not want to that money. Is that considered a donation?
JohnM48 (Pennsylvania)
Posts: 89
Posts: 89
Posted:
Petunka,
For tax purposes, the term 'donation' really only has meaning in the context of a charity receiving the donation. Since HOAs are not charities, they do not receive donations, as such, but rather they receive income.
If I understand your question, you want to refuse the fee to which you are entitled and are wondering if your refusal would constitute a donation. Since you HOA is not a charity your refusal makes you a good, community-centric person, but it is not a donation.
For tax purposes, the term 'donation' really only has meaning in the context of a charity receiving the donation. Since HOAs are not charities, they do not receive donations, as such, but rather they receive income.
If I understand your question, you want to refuse the fee to which you are entitled and are wondering if your refusal would constitute a donation. Since you HOA is not a charity your refusal makes you a good, community-centric person, but it is not a donation.
Association President
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Quote:
Posted By JohnM48 on 11/19/2011 4:00 PM
I would like to hear from either an accountant or tax attorney on this...I don't know but think it might be
Posted By BradP on 11/19/2011 3:13 PM
Posted By MarshallJ on 11/19/2011 1:06 PM
We would like to know if donating money to an HOA is deductible on income tax for the donee?
We would like to know if donating money to an HOA is deductible on income tax for the donee?
I would like to hear from either an accountant or tax attorney on this...I don't know but think it might be
Brad,
I've owned a tax accounting firm for about 35 years. "Donations" to an HOA is NOT tax deductible as HOA's are not recognized charities. In order for a donation to be tax deductible, the receiving organization must be recognized by the IRS as a bona fide charity. Since an HOA exists solely for the benefit of its members, it does not qualify as a charity.
HTH
perfect...thanks for the clarification
JohnM48 (Pennsylvania)
Posts: 89
Posts: 89
Posted:
My pleasure Brad
Association President
SteveM9 (Massachusetts)
Posts: 3,699
Posts: 3,699
Posted:
Quote:
Posted By MarshallJ on 11/19/2011 1:06 PM
We would like to know if donating money to an HOA is deductible on income tax for the donee?
We would like to know if donating money to an HOA is deductible on income tax for the donee?
Well you can do your taxes, claim it as deductible and send it the paperwork to the IRS. They may audit you, they might not. If they do audit you, they will tell you its not deductible and then tell you how much more you owe them.
SusanW1 (Michigan)
Posts: 5,202
Posts: 5,202
Posted:
Petunia - if you decline a stipend, then that's it. The HOA books simply don't count it as a deduction, since it never went out.
If you do take the pay . . . even if you "donate" it to charity, you still must run it thru your own personal finances. In other words, accept the stipend, then donate it to a charity where you CAN receive the IRS deduction.
We had a township trustee who tried to divert his "pay" to a charity without accepting it first. He was told he could not divert his income directly to the charity (which BTW as setup by him, to pay water bills for families in need. Nice gesture, but he must go thru the proper procedures)
If you do take the pay . . . even if you "donate" it to charity, you still must run it thru your own personal finances. In other words, accept the stipend, then donate it to a charity where you CAN receive the IRS deduction.
We had a township trustee who tried to divert his "pay" to a charity without accepting it first. He was told he could not divert his income directly to the charity (which BTW as setup by him, to pay water bills for families in need. Nice gesture, but he must go thru the proper procedures)
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Petunka,
If you accept the money, you must include it in income, even if you donate it to charity, in which case you report it as a deduction on Schedule A. For you, it is a "wash", but it must still be reported. However, if you don't itemize your deductions - - - oh well.
If you accept the money, you must include it in income, even if you donate it to charity, in which case you report it as a deduction on Schedule A. For you, it is a "wash", but it must still be reported. However, if you don't itemize your deductions - - - oh well.
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By MarshallJ on 11/19/2011 1:06 PM
We would like to know if donating money to an HOA is deductible on income tax for the donee?
We would like to know if donating money to an HOA is deductible on income tax for the donee?
No, you may not claim the "donation" as a charitable deduction on Schedule A. Also, your associations fees are not deductible.
I prepare tax returns for a local CPA firm.
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
FYI: Association fees are deductible for RENTAL property. If you use the property as RENTAL and do not live there, then Association fees are deductible as part of the maintenance of the property. That is the only way you can deduct Association fees.
Former HOA President
PetunkaM (Florida)
Posts: 1,009
Posts: 1,009
Posted:
Dear Susan, John and Bruce,
I thank you. I was just trying to figure out if I could take the Treasurer’s compensation- which I do not want- and move it from the Operating Fund into another fund such as ‘Beautification fund’. You see, my husband was a financial guru but since Nov. 3rd I am on my own. Sorry, I do not even know why I even mention it. But, as you can imagine, I am in tears.
I thank you. I was just trying to figure out if I could take the Treasurer’s compensation- which I do not want- and move it from the Operating Fund into another fund such as ‘Beautification fund’. You see, my husband was a financial guru but since Nov. 3rd I am on my own. Sorry, I do not even know why I even mention it. But, as you can imagine, I am in tears.
TimB4 (Tennessee)
Posts: 21,047
Posts: 21,047
Posted:
Petunka,
I'm sorry for your loss. You are in my prayers
Tim
I'm sorry for your loss. You are in my prayers
Tim
JohnM48 (Pennsylvania)
Posts: 89
Posts: 89
Posted:
My condolences Petunka,
Although your intentions are good, unfortunately it's not that easy. If you accept the fee and then return it to the fund of your choice, it will be considered income to you which will qualify as a deduction to the association, and then income back to the association but not a deduction for you.
Although your intentions are good, unfortunately it's not that easy. If you accept the fee and then return it to the fund of your choice, it will be considered income to you which will qualify as a deduction to the association, and then income back to the association but not a deduction for you.
Association President
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Petunka,
JohnM48 speaks the truth.
I am sorry for your loss.
JohnM48 speaks the truth.
I am sorry for your loss.
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
I have an idea...Why not accept the money but use it as an oportunity to socialize the HOA more? You wouldn't be spending the HOA money directly but you could hold a holiday dinner, a block party, or other social event. Maybe even use it as a means for a Neighborhood watch. These are items that typically shouldn't be funded by HOA money. (Although some HOA's do depending on their situation).
It's a win-win situation as you can receive the money but also spend it in better communication amongst HOA members. Everyone loves a block party and it can give an oportunity for people to meet eachother outside of the HOA meetings. Organizing a neighborhood watch program doesn't cost that much money but there could be a few items the money could purchase for it. Think it over as this way your giving back but also not messing with the system already in place.
It's a win-win situation as you can receive the money but also spend it in better communication amongst HOA members. Everyone loves a block party and it can give an oportunity for people to meet eachother outside of the HOA meetings. Organizing a neighborhood watch program doesn't cost that much money but there could be a few items the money could purchase for it. Think it over as this way your giving back but also not messing with the system already in place.
Former HOA President
BruceF1 (Connecticut)
Posts: 2,535
Posts: 2,535
Posted:
Quote:
Posted By MelissaP1 on 11/21/2011 1:25 PM
I have an idea...Why not accept the money but use it as an oportunity to socialize the HOA more? You wouldn't be spending the HOA money directly but you could hold a holiday dinner, a block party, or other social event. Maybe even use it as a means for a Neighborhood watch. These are items that typically shouldn't be funded by HOA money. (Although some HOA's do depending on their situation).
It's a win-win situation as you can receive the money but also spend it in better communication amongst HOA members. Everyone loves a block party and it can give an oportunity for people to meet eachother outside of the HOA meetings. Organizing a neighborhood watch program doesn't cost that much money but there could be a few items the money could purchase for it. Think it over as this way your giving back but also not messing with the system already in place.
I have an idea...Why not accept the money but use it as an oportunity to socialize the HOA more? You wouldn't be spending the HOA money directly but you could hold a holiday dinner, a block party, or other social event. Maybe even use it as a means for a Neighborhood watch. These are items that typically shouldn't be funded by HOA money. (Although some HOA's do depending on their situation).
It's a win-win situation as you can receive the money but also spend it in better communication amongst HOA members. Everyone loves a block party and it can give an oportunity for people to meet eachother outside of the HOA meetings. Organizing a neighborhood watch program doesn't cost that much money but there could be a few items the money could purchase for it. Think it over as this way your giving back but also not messing with the system already in place.
Melissa,
It's a nice gesture, but Petunka would still have to report it as income and using it as you suggest is not deductible.
PetunkaM (Florida)
Posts: 1,009
Posts: 1,009
Posted:
Tim,
you are sweet. Am so sorry I even mentioned it. I totally lost it and wish I could delete that post. The Army came to fold the flag. Now I am thinking about all the young people.. never mind. Please, no need to reply.
John and Bruce,
thank you also. I was not going to accept the fee. I was just going to transfer the money from one fund to another, quietly. -) This was just an innocent idea I did not think IRS would even notice. BUT, I understand perfectly well what you saying. I leave the money -less than $2K-in the Operating fund.
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Quote:
Posted By PetunkaM on 11/22/2011 4:39 PM
Tim,
you are sweet. Am so sorry I even mentioned it. I totally lost it and wish I could delete that post. The Army came to fold the flag. Now I am thinking about all the young people.. never mind. Please, no need to reply.
John and Bruce,
thank you also. I was not going to accept the fee. I was just going to transfer the money from one fund to another, quietly. -) This was just an innocent idea I did not think IRS would even notice. BUT, I understand perfectly well what you saying. I leave the money -less than $2K-in the Operating fund.
Tim,
you are sweet. Am so sorry I even mentioned it. I totally lost it and wish I could delete that post. The Army came to fold the flag. Now I am thinking about all the young people.. never mind. Please, no need to reply.
John and Bruce,
thank you also. I was not going to accept the fee. I was just going to transfer the money from one fund to another, quietly. -) This was just an innocent idea I did not think IRS would even notice. BUT, I understand perfectly well what you saying. I leave the money -less than $2K-in the Operating fund.
Petunka...no need to feel sorry for anything, there is no manual on how to handle the loss of a loved one. you are in our thoughts and hope you can have a semblence of a good holiday season...
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
One of the reasons why I suggested keeping the money but spend it on a HOA social event...is make sure you get out with people. Your period of loss you could use some friends nearby. Don't know if you will retain this paid position but you don't want to ruin the paid position to whoever takes it over. Keep enough of the money to pay the taxes you may incur by collecting it. It's a good for you to get out there and meet people who can help you through such a tough time. Not only could it help you but improve other aspects of the HOA.
God bless and take care...
God bless and take care...
Former HOA President
PetunkaM (Florida)
Posts: 1,009
Posts: 1,009
Posted:
Brad,
thank you and anyone who can maintain grass and be as thoughtful as you are have my respect. Gosh, grass in Florida is horrible. Sorry to get off the subject.
__
‘Don't know if you will retain this paid position but you don't want to ruin the paid position to whoever takes it over. Melissa’
Melissa,
no way I would try to ruin the paid position for anyone. In fact, I cannot influence the BOD fees one way or the other. No one on the BOD can, It is the homeowners’ decision; always.
thank you and anyone who can maintain grass and be as thoughtful as you are have my respect. Gosh, grass in Florida is horrible. Sorry to get off the subject.
__
‘Don't know if you will retain this paid position but you don't want to ruin the paid position to whoever takes it over. Melissa’
Melissa,
no way I would try to ruin the paid position for anyone. In fact, I cannot influence the BOD fees one way or the other. No one on the BOD can, It is the homeowners’ decision; always.
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Petunka...i am a little different than most, but having a nice lush yard is awesome...would love to give the florida climate a shot, could have year round green grass!
PetunkaM (Florida)
Posts: 1,009
Posts: 1,009
Posted:
Quote:
Posted By BradP on 11/25/2011 8:56 AM
Petunka...i am a little different than most, but having a nice lush yard is awesome...would love to give the florida climate a shot, could have year round green grass!
Petunka...i am a little different than most, but having a nice lush yard is awesome...would love to give the florida climate a shot, could have year round green grass!
Brad,
You are the person of my heart. Florida is tough unless you have an access to 'inexpensive' water because drinking water is becoming a scarce commodity here; it is a problem.
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