If you don’t think you need to file an annual tax return, think again!
When I get involved with a new homeowner association or community association, questions about the need for a tax return are typically part of initial discussions. This is also one of the most overlooked association responsibilities. Unless you file an extension, your association’s tax return is typically due April 15.
All HOAs and Community Associations need to file an annual tax return
Most board members think that since their associations are non-profit organizations, no tax return needs to be filed. That is not correct. Georgia and the IRS require HOAs and community associations to file federal and state tax returns. You may need to pay tax on net income not related to standard association activities.
Which association income is taxable?
Depending on the filing criteria that you choose, net income from HOA dues and assessments is probably not taxable. However, interest income is the most common taxable item. If you rent your clubhouse to the general public, that income, minus rental costs, is also taxable income.
If you hire an accountant with HOA and community association experience, tax returns are fairly simple and inexpensive to prepare. Please give me a call if you have specific questions.
Neal Bach, CPA