Taxation

All associations must file a federal income tax return every year. The lack of taxable income does not eliminate the need to file a tax return nor does filing a tax return mean the association owes the government money. If tax returns for previous years were not filed, the current board is not absolved from filing.

A community association is generally required to file its federal income tax return as a corporation using Form 1120, but may elect, if it meets certain requirements, to file as a homeowners association using Form 1120H. The association should consult a tax professional for assistance in determining which form to file.

A community association’s federal tax return is due the fifteenth day of the third month after the end of the tax year (March 15th for fiscal years ending December 31st). Although possible to obtain up to a six-month extension of time in which to file a return, an extension request form must be filed with payment of any expected tax due by the original filing deadline.