While figuring out what the appropriate homeowners association tax return to file seems like it would be a fairly straightforward process, there are a lot of factors that go into determining the correct form for your association. Some states including California allow for homeowners’ associations to be setup without incorporating. These types of homeowners’ associations are considered unincorporated.
Being unincorporated at the state level does not mean you don’t have to file a federal, or possibly even a state tax return. In fact all homeowners’ associations should file a federal tax return, which tax return that is depends on the structure and operations of the homeowner association. For example a homeowners’ association that receives exempt status from the IRS may file Form 990. Although, receiving exempt status for a homeowners’ association may be done, associations rarely apply for federal exemption. A vast majority of homeowners’ associations file Form 1120-H (U.S. Income Tax Return for Homeowners Associations). Both incorporated and unincorporated homeowners’ associations file Form 1120-H.Continue Reading