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A homeowners association, or HOA, is either a condominium management association, a residential real estate management association, or a timeshare association. An HOA may elect to file Form 1120-H U.S. Income Tax Return for Homeowners Associations as its income tax return, in order to take advantage of certain tax benefits. These benefits, in effect, allow the association to exclude exempt function income from its gross income.

Exempt function income consists of membership dues, fees, or assessments from owners of HOA property or rights. This income must come from the members as owners, not as customers, of the association's services. Some examples include assessments made to pay principal, interest, and real estate taxes on association property, maintenance of the property, and snow and trash removal.

A homeowners association makes the election to file Form 1120-H separately for each tax year in order to take advantage of certain tax benefits, and pay a flat tax rate on taxable income (30%, or 32% for timeshare associations). If the HOA does not make the election, it must file the applicable tax return instead, likely Form 1120 U.S. Corporation Income Tax Return.

To file Form 1120-H within TaxAct® 1120 Corporation:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Basic Information in the Federal Quick Q&A Topics menu to expand, then click Special Filings.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Special Filings, check Homeowners association, then click Continue.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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