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Subject: Federal tax liability

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KathrynK1
(Maryland)

Posts:1

06/25/2008 10:03 PM
We are a home owners association of 158 homes. We are a non-profit corporation. Must we file federal income tax returns? Maryland.

GlenL
(Ohio)

Posts:1221

06/26/2008 12:38 AM
Yes on form 1120-H although unless you receive large amounts of interest on your reserves you will owe no taxes. If you put 1120 in the search box on the topics page you will find a wealth of posts on this subject.

BruceF1
(Connecticut)

Posts:499

06/26/2008 5:19 AM
Yes, you must file federal income tax returns on form 1120-H as Glen said. However, I will add that you may have to pay taxes if your "outside" income (not just interest on reserves) exceeds 20% of your total income. For example, fees collected for rental of a clubhouse would also be considered outside income. Income received from assessments or dues and used to pay association expenses is not taxed. You may also have to file state income tax forms as well (we do). You can find a wealth of information as Glen suggested, or you can go to the IRS website at www.irs.gov and look there.

MaryA1
(Arizona)

Posts:1556

06/26/2008 11:54 AM
Kathryn, Most HOAs end up with no tax liability to the IRS. The Form 1120-H (specific to HOAs) gives a $100 exemption on taxes due. However, depending upon the type of income generated by the HOA it may be more beneficial to file the standard corporate tax return -- Form 1120, as the tax rate is much lower. The decision on which form to use is best left to the discretion of your CPA. If MD has a state income tax the HOA most likely is also required to file a st. tax return.

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Forums > Homeowner Association > HOA Discussions > Federal tax liability

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