HOA Taxes

Almost everyone in the homeowners association and those in the industry always asks the same question. Unfortunately, there are many forms of taxes and lots of regulations that make that a rather complicated question to answer.

Do HOA’s file tax returns? Under the eyes of federal tax laws, homeowners associations fall under the category of corporations. So, even though your HOA is not-for-profit, it must still follow corporate rules when it comes to taxes. Following this logic, the short answer to the question, “Does an HOA pay taxes?” is yes.

There is a rare exception to this rule, though. If your HOA registers as a non-profit with the IRS and subsequently accepted as such, you don’t fall under this category. Keep in mind that filing for such recognition requires a ton of work and involves Form 1024.

What About State Taxes?

Does an HOA have to file a tax return? When it comes to state taxes, the laws differ from state to state. Your HOA may need to file a state homeowners association tax return depending on the location you are in.

For instance, HOAs need to file tax returns and pay taxes in Massachusetts. To determine whether your HOA needs to pay state taxes, it is best to check with a CPA. Your HOA accountant can also help with filing federal HOA tax returns.

When Should an HOA Pay Taxes?

For non-profit corporations, the deadline for filing federal tax returns is 75 days after the end of their fiscal year. Most HOAs have a fiscal end date of December 31, the last day of the year. In that case, the deadline falls on the 15th of March.

Make sure to prepare all the required documentation during those 75 days so that you don’t miss the deadline. If you expect to go beyond the due date, you can file for an extension for free. In fact, most associations automatically file for an extension because 75 days usually aren’t enough to make all the necessary preparations. An extension gives you an extra 6 months to file. We can help you to file for an extension on your association’s behalf.

If your HOA never filed tax return or has missed paying homeowner association taxes for the past few years, don’t worry. It is not too late. The first thing you should do is check how many years have passed since your last filing. Then, get in touch with the IRS to see whether you can file a Form 1120-H for the years you missed. If they say yes, immediately accomplish the forms for the missed years. On the other hand, if they say no, see what else you can do to remedy the situation.