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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120807  
Subject: Re: Non-profit HOA tax return Date: 7/31/2012 12:32 PM
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I drew the short straw and got made the HOA treasurer. The HOA itself is tiny does not do much over the course of a year. (Just pay for some snow plowing, insurance and gardening.) The dues and the expenses just about match over the course of the year.

I know that it has to file a tax return of some flavor, but not much about it.

Any pointers to the IRS pubs that cover this? Going to a professional for the actual return is certainly a possibility, but I need to know some background.

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Start with the instructions to Form 1120-H.
http://www.irs.gov/pub/irs-pdf/i1120h.pdf

A HOA is generally an exempt organization under Code Section 501(c)(7).
It is taxed only on its investment income (interest, dividends, etc.) at a rate of 30%. This may or may not be cheaper than filing as a regular corporation (filing and 1120) and treating all your dues, assessments, etc., as business income, if you're about breaking even.

You have the option to do either. And you can change your election every year. The instructions spell this out on pages 1-2.

Bill
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