Our 10 unit condo association ownership has recently bee passed on the homeowners and I am one of the trustees. My question is around filing the yearend taxes. So far, the accounting firm had been filing 1120 form, but I was wondering if we can file in the form 1120-H ourselves without involving an accounting firm. The form looks straightforward and I do my own personal taxes anyways. Our condo income and expenses are all in the exempt category and nothing is taxable.
Given that the association has just been started, you'd be better off using a CPA. The members pay their dues. CPAs don't charge that much to file taxes. And you should use a professional to make sure you're getting all the right breaks for the association.
There is no law saying that you must reach out to a CPA to do the taxes. However, it may be beneficial and more convenient for them to do so anyway.
I would have to assume that the cost of the tax preparation should be built into the maintenance fees.
How much would each member in the HOA save by eliminating the tax fees?
you also need to consider your personal liability if you do the taxes wrong. Right now, you pay 10% of the bill for the accountant to do the taxes without having to take on any liability. If you do the taxes yourself, you take on 100% of the liability for only 10% of the savings.
Thank you all very much for taking your time and posting replies. We are 10 unit condo and pay the accountant $1100 for filing tax. It is simply 10 residential units and no other facilities like clubhouse, pool etc. We have absolutely no other income or means of earning income besides HOA dues and absolutely no other expense other than the maintenance and repair and measly amount of reserves. Reserves stay as cash deposit and earn no income. Based on everything I have read all of this income is exempt. So far, the builder was running the condo trust and filing 1120 through an accountant but 1120H looks far less complicated. Thus my primary question- if I can switch to 1120-H next tax year when we have been filing 1120 for 8-10 years.
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