association’s income is non-exempt income (i.e., payment from nonmembers or members for rental of the clubhouse or payment from nonmembers for use of the community’s attributable to something other than managing/maintaining
Form 1120’s Primary Advantage
Generally, Form 1120-H is best for most associations. So, 1120 vs. Form 1120-H? The short answer: to reduce their taxes owed.
Income from non-exempt activities
An association’s net income from exempt activities is not rate is graduated from there). If your association generates a related expenses to deduct from that income, using Form 1120 will could save you on the tax bill.
Exempt income under Form 1120-H could be taxable income under Form 1120.
There are two disadvantages worth mentioning: 1) form 1120 is much more complex than form1120-H, 2) income that is otherwise considered exempt income under Form 1120-H could be taxable income under Form 1120 and 23) Form 1120 has a higher chance of being audited.
Form 1120 has a higher chance of being audited.
Filing Deadlines
Generally, both Form 1120-H and Form 1120 are due by the 15th day of the fourth month after the close of an association’s tax year-end. So, if your association has a December 31 calendar year-end, your tax returns are due
after the end of its tax year (September 15th).
return—but you’ll still need to make an extension payment that estimates your total tax liability (due April 15th as a December 31 tax year-end association).
You will make an extension payment that estimates your total tax liability.
Form 990: a Rare Outlier
You might have heard that HOAs can obtain tax-exempt Organizations Exempt from Tax. This is rare. An association would have to prove itself a “social welfare organization” who live in the neighborhood).
An association would have to prove itself a “social welfare organization.”
HOA Tax Experts Can Help
While this is a high-level summary of your annual federal association, there are many rules about what income is
There are many rules about what income to keep in mind.
services for community associations/common interest realty associations to ensure you are aware of the ins and outs of all federal regulations.
Plan Ahead
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