You are a U.S. non-profit corporation. Just because you didn't earn anything doesn't mean you don't file. You need to file for last year as well. In regards to what form to use, for the Federal Government you use the 1120 or 1120H. Both are U.S. Corporate Forms, though the second is specifically for Homeowner associations (hence the H). To file the 990 as a non-profit is very hard and involves a lot of paperwork. You have to show either public access or a public benefit. In many states you can't change the status without some legal paperwork. Here is a link that while for New England, is applicable overall. I am in Michigan and most of our associations file as an 1120 or 1120H. http://condomagazines.com/articles/137/1/Federal-Form-1120-H-990-or-1120/Page1.html
Check previous years and see what was used. Even if you didn't earn much interest, you may get a tax credit for the association depending on your expenses and particularly if you had capital (reserve) expenses. This credit can be applied to future years, lowering your tax burden for when you don't have the capital expenses and you may be earning some decent interest. You can (and probably should)consult a tax expert/consultant as well. But if anyone argues about filing, (particularly if you have no "earnings") tell them to call the IRS and try that argument.
In addition to filing taxes some Assocations are not aware that if they pay an individual $600.00 or more they are obligated to file a 1099. This is important because the IRS can require the association to pay taxes and penalties on this amount if the person receiving the payment does not. www.irs.gov/pub/IRS-PDF/1099misc.pdf)
Your comments from Bill are correct. We are in Florida and must also file with sunbiz each year to keep our non-profit up to date, plus a yearly to the state for corporate Income which has a non profit exemption. Your state may need to be filed also.Look on the net for your state condo statues.
I wrote the orig. question at the top. We are in Belleville, Michigan. I read the article, Thank you. I had seen it before asking the question..good reading.
Looking over the 990 qualifiers, does public access mean "for the public" such as our roadways? Our streets are owned by our Condo Assoc. Although not gated, we have a sign at our two entrances that say these are private roads, no trespassing. We have no parks. But again, our common areas are only for the co-owners, not the public to use.
We are a non-profit though...does this "require" us to file the 990?
Thanks for all the input!!
Not sure if it matters, but we are a site-condo Association, consisting of single family homes. We own our own lots and homes and are responsible for our own upkeep. The common areas are taken care of by the Association.
Unless your assn. is a 502(c)(4) tax-exempt corp you cannot file the Fed. form 990. One of the qualifications for this designation is that your common areas and any amenities must be open to the public. If the IRS has not assigned you this tax-exempt designation then you must file either the corp. form 1120 or the HOA-specific form 1120H. I think the latter is what you should file but your CPA would be better suited to make that determination. If your state has income tax for corps then you must also file a state tax return. If the assn. has failed to file the proper returns, or none at all, in years past, if there was no tax owed there will be no penalties imposed. However, IMO, those back tax returns should be filed ASAP whether there was tax owed or not. In view of the situation I would seriously consider consulting with a CPA.
Thank you for all the info.
After spending around 4 hours on the line with the IRS, we have come to the conclusion that we need to file the 1120H. I talked with about 5 different people. They all have their own training for specific forms....hence 5. IF our roads and common areas were for the public to use also, we would qualify to do a 501c... and then we would register as a tas exempt also,before filing as the 501c. Since our common areas and roads are for us only, meaning that we take care of, maintain....we cannot do the 501c. That was the main qualifier for us. Therefore, we need to file the 1120H. I hope this helps others in any of their situations. Thanks again!
Is there a taxable difference to interest earned by an HOA for bank interest on deposited funds and delinquent dues interest paid by homeowners? Or is it all considered taxable interest income. What's the difference on F1120H line 2 taxable interest and line 13 interest? The instructions are non existent.
I would think that unless the homeowners) who paid the interest to you are going to give you a statement indicating how much interest was paid, you don't need to claim it. But I'm not a CPA -- that's just my own educated guess. However, I am certain that you must claim interest earned on bank accounts and any other investments.
The average person has enough tax forms to submit as it is. I can only imagine the paperwork and tax forms that condo associations and the HOA have to deal with. I'm assuming that they would hire a tax preparation service. It would probably make the process so much simpler. I wonder which company they use if that's what they do. There's tons out there. http://www.rainbowtaxnv.com/firm_profile.html
If you don't know what you are doing then I would get help. tax preparation services really aren't that expensive and save you a ton of time. I'm not confident enough to do my own taxes so I go online or have someone do it for me. Non-profits are tricky which is why I would definitely go with a service to do your taxes. http://www.cpa-kankakee.com/tax.htm
If you haven't filed for more than a few years, you might need to talk to a professional. You should have filed, even if you didn't make an income on the business. Taxes are tricky enough when you do them regularly. I'd really recommend seeing someone who can help you sort things out.
Jenn | http://www.tri-check.com