[kate_anders]

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We’ve recently assumed control of our HOA from the developer, and they advised me to apply for an Employee Identification Number (EIN), which I’ve done. Does this imply that our HOA will now need to file a tax return too?

[wazzackrind]

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Indeed, HOAs are required to file tax returns. This topic has sparked significant discussion. You can find more information by clicking on the Search option, conducting a search, and then viewing and reading the relevant materials.

[enginecore]

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@wazzackrind

As a newly established HOA (since August 2023), I’m exploring liability insurance options for our common areas for the upcoming year. Can we deduct this expense on our 1120H tax return? If so, where should it be recorded?

Furthermore, our developer transferred control to the HOA in August 2023. Should we file taxes this year, or should we wait until next year when we have a full year of operating as an HOA? Should we adhere to the calendar year 2023, or would it be advisable to align our fiscal year from August 2023 to August 2024?

[wazzackrind]

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Hi @enginecore

Taxable items on the 1120-H form are detailed on lines 1 through 8, encompassing interest and dividends earned from the investment of reserve funds, which often constitute the entire gross income subject to taxation for many HOAs.

Line B captures income from assessments and other sources related to exempt functions (assuming there isn’t significant income beyond assessments, satisfying the 60% rule). Line C accounts for expenses such as insurance, maintenance, management, and includes additions to the reserve fund (critical for meeting the 90% rule).

It’s advisable to consult your bylaws, as some may stipulate the fiscal year. Your tax year and federal identification number may already be established if your developer has been handling HOA tax filings. If the developer didn’t file taxes in 2023, it’s essential to act promptly; 1120-H tax filings are due by March 15, 2024.

[enginecore]

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Do the tax filing deadlines for HOAs align with those for personal taxes? In other words, if your taxes are postmarked by midnight on March 15, 2024, does the IRS consider them timely? Or do they need to reach Ogden, UT by the same date? Thank you for your assistance and timely responses.

[wazzackrind]

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Make sure it’s postmarked by March 15th.

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