Homeowners associations (HOAs) have several tax and accounting requirements, including:
Tax forms
HOAs typically use Form 1120-H to file their taxes. However, HOAs must meet certain qualifications
to use this form, such as:
85% of homes must be used for residential purposes
90% of expenditures must go to HOA maintenance and operations
60% of HOA income must come from members
Tax filing dates
HOAs usually file their taxes on or before April 15, but the exact date depends on the HOA's fiscal
year. HOAs should check the IRS website for specific details.
State taxes
Whether an HOA must pay state taxes depends on the laws of the state. HOAs should check their
state's tax laws to determine if they need to file a state tax return.
Accounting basis
HOAs can use the accrual basis, cash basis, or modified accrual basis for their accounting. The accrual
basis is recommended because it reflects all revenues and expenses, and is in conformity with GAAP.
Record keeping
HOAs should keep detailed records of their finances. This can help with financial planning, tracking
dues, and budgeting.
Financial reporting
HOAs should provide regular financial reports to homeowners, such as income statements, balance
sheets, and budget updates.
Transparency
HOAs should foster transparency and open communication with homeowners. They can do this by
holding regular meetings to discuss financial matters.
