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HOA Tax Preparation: Form 1120-H for $175

Your association is a corporation, and corporations file tax returns. Most homeowners and condominium associations file federal Form 1120-H, a two-page return that excludes assessments from income and taxes what is left — usually just interest on the bank balances. Dynamite Management prepares that return for $175 flat, in any state, for self-managed associations and for boards paying a CPA several times that for the same two pages.

You send the year-end statements. We prepare the return from the ledger, and you get back a completed Form 1120-H ready for an officer to sign, plus a one-page memo the treasurer can read out at a board meeting.

$175 federal Form 1120-H · +$100 state return where one is owed · included on the HOA Fiscal Managed plan

Get on the December list
Year-end association financial statements ready for Form 1120-H preparation

Who this is for

Self-managed associations

Nobody on a volunteer board wakes up wanting to learn Section 528. The return is short, the rules are narrow, and the mistake that costs money is not a wrong number — it is a return that never gets filed. If your board handles its own books and nobody has owned this task, this is the task to hand off.

Associations already on HOA Fiscal

The return is prepared straight from the ledger that is already in the platform: the trial balance, the income statement, the reserve interest. There is nothing to gather and nothing to reconcile twice. The price is the same $175 on the Essentials and Automate plans, and the return is included at no extra charge on the Managed plan.

Associations that missed last year

Some boards discover at a transition that a return was never filed when a treasurer resigned. A missed year can still go on Form 1120-H for 12 months after its due date, including extensions — after that it cannot, and the year becomes a Form 1120. See “Behind on filings?” below.

What's included

The $175 covers the whole return, not a starting point that grows. Working from your year-end statements, we do the following:

  • Run the two Section 528 qualification tests from the ledger — the 60% gross income test and the 90% expenditure test — and tell you the result in writing before we file.
  • Classify every dollar as exempt function income or nonexempt income: assessments and member fees on one side; bank and reserve interest, laundry income, clubhouse and amenity rentals to nonmembers, cell-tower and antenna leases, and similar items on the other.
  • Allocate expenses to nonexempt income where the law allows, so you are not taxed on gross receipts.
  • Apply the $100 specific deduction and compute the tax at the flat 30% rate (32% for timeshare associations).
  • Make the Section 528 election by preparing and filing a complete, timely Form 1120-H — the election exists only because the return is filed.
  • Track the due date and, if the year-end statements are late, prepare Form 7004 for the automatic extension.
  • Prepare the state return where the association owes one, for $100 more.
  • Return a PDF for the association’s official records file, so the return sits with the minutes and the reserve study instead of in a former treasurer’s inbox.
  • Write a plain-English cover memo — what the association owed, why, and what changed from last year — short enough that the treasurer can read it into the minutes.

Dynamite signs as paid preparer. An officer of the association signs the return itself. The board decides; we prepare.

Preparing an association tax return from the ledger

How it works

1

Engagement letter (December, 10 minutes)

We send an engagement letter in December, before year-end statements exist. It names the association, the tax year, the fee, and who at the association we deal with. The board approves the engagement — a motion in the minutes is enough — and one officer signs it.

2

Documents (January, an hour at most)

We ask for the year-end balance sheet, income statement, general ledger detail, the December bank and investment statements, any Forms 1099-INT, and last year’s return if one exists. We want these by the end of January. On HOA Fiscal we pull them ourselves and ask you for nothing but the 1099s. If you are missing a piece, tell us what you have — we will work out whether it matters before you go hunting.

3

Preparation (usually within two weeks of complete statements)

We run the qualification tests, classify the income, and prepare the return. If something in the ledger does not fit — a large clubhouse rental, an insurance settlement, a developer transition payment — we come back with a question rather than guessing. This is where an auditor’s habits help: the odd line item is usually a coding decision nobody revisited.

4

Review and filing (a week, mostly waiting on you)

You get the draft return, the cover memo, and a note on anything the board should know. An officer signs. We file, and you get the filed copy and the acknowledgment. From signature to acknowledgment is usually a few days.

Start the season early. We open engagement letters in December and want year-end statements by the end of January. Associations that come to us in April get filed, but they get filed on an extension. Contact us to get on the list.

Pricing

One price, set in advance. There is no hourly billing, no per-schedule add-on, and no surcharge for a larger association — a 300-unit condominium and a 22-unit townhome association pay the same, because the return is the same two pages.

Service Price
Federal Form 1120-H preparation $175 flat
State return, where the association owes one +$100 flat
HOA Fiscal Managed plan Included

Two things are not in that price. If the association does not qualify for Section 528 or the board decides not to elect, the return is a Form 1120, which is a real corporate return with a balance sheet and reconciliations — we quote that separately. Amended prior-year returns are also quoted separately. A missed year that is still inside the 12-month window for the 1120-H election is $175, same as any other year; a year outside that window can no longer be filed on Form 1120-H and is quoted as a Form 1120.

Deadlines

Form 1120-H is due on a schedule set by the association’s tax year, not by the calendar. Most associations are calendar-year filers, which puts the return on the same April date individuals know.

Association’s tax year Form 1120-H due
Calendar year, ending December 31 15th day of the 4th month — April 15
Fiscal year ending June 30 15th day of the 3rd month — September 15
Any other fiscal year 15th day of the 4th month after year end
With an extension Form 7004 — automatic 6 months

The IRS instructions state the rule directly:

Generally, an association must file Form 1120-H by the 15th day of the 4th month after the end of its tax year. However, an association with a fiscal year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. If the due date falls on a Saturday, Sunday, or legal holiday, the association may file on the next business day.

— Instructions for Form 1120-H, IRS.gov

An extension is an extension of time to file, not of time to pay. If the association expects to owe tax, pay the estimate with the extension.

Filing late has a price:

A homeowners association that doesn’t file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $525.

— Instructions for Form 1120-H, IRS.gov

Read that carefully, because the arithmetic matters for associations that are behind. The penalty is a percentage of unpaid tax. An association whose only nonexempt income was $900 of reserve interest owes very little tax, so 5% a month of very little is very little, and the minimum penalty for a badly late return is capped at the tax due. The real cost of not filing is not the penalty. It is the election, which is described below.

1120-H or 1120?

Form 1120-H is not automatic. It is an election an association qualifies for and then claims, one year at a time. Three tests decide whether the association qualifies, and the IRS states them in these words:

At least 60% of the association’s gross income for the tax year must consist of exempt function income.

At least 90% of the association’s expenses for the tax year must consist of expenses to acquire, build, manage, maintain, and care for its property.

No private shareholder or individual can profit from the association’s net earnings except by acquiring, building, managing, maintaining, or caring for association property or by a rebate of excess membership dues, fees, or assessments.

— Instructions for Form 1120-H, IRS.gov

Exempt function income is the assessment revenue: “membership dues, fees, or assessments from (a) owners of condominium housing units; (b) owners of real property in the case of a residential real estate management association; or (c) owners of timeshare rights to use, or timeshare ownership interests in, real property in the case of a timeshare association.” The association also has to be residential in character — a condominium management association is one caring for a project “substantially all of whose units are homes for individuals,” and a residential real estate management association one caring for a development “substantially all of whose lots or buildings are homes for individuals.”

Qualifying income is taxed at “a flat rate of 30% for condominium management associations and residential real estate management associations,” and 32% for timeshare associations, after a $100 specific deduction. The election “is made separately for each tax year and must generally be made by the due date, including extensions, of the income tax return,” and “if the association does not elect to use Form 1120-H, it must file the applicable income tax return, for example, Form 1120, U.S. Corporation Income Tax Return.”

For nearly every self-managed residential association, 1120-H is the right answer, and the entire taxable amount on the return is interest earned on reserve and operating balances. The risk on this return is not the tax. It is the missed election. The instructions give an association an automatic 12-month extension to make the Section 528 election, “provided corrective action is taken within 12 months of the due date (including extension) of the return” (Regulations section 301.9100-2). Past that window the year can no longer be filed on Form 1120-H at all; it has to go on Form 1120, where assessments are not excluded by Section 528. For the line-by-line version, HOA Fiscal publishes Form 1120-H instructions for treasurers.

State returns

Filing federal Form 1120-H does not settle the state question, and the answer is genuinely different from state to state — Florida excuses you outright, Arizona says the opposite in so many words, and Oregon splits the difference. Where a state return is owed, we prepare it for $100.

State State return when you file federal 1120-H? Form and due date (calendar-year)
Washington No income tax return No corporate income tax and no state income tax return. Washington’s business and occupation (B&O) tax has its own rules for associations — member assessments spent on repair, maintenance, replacement or improvement of commonly held property are deductible; ask us if the association has nonmember revenue
Oregon Only if there is nonexempt function income Form OR-20 with a copy of federal 1120-H, due the 15th day of the month after the federal due date (May 15). With no nonexempt function income, file only a copy of the 1120-H
California Usually Form 100 if nonexempt function income exceeds $100, due the 15th day of the 4th month (April 15); Form 199 if average gross receipts exceed $50,000, due the 15th day of the 5th month (May 15)
Florida No An association that files federal 1120-H is not required to file a Florida corporate income tax return (Form F-1120 is required only if it files federal Form 1120)
Arizona Yes Form 120 or Form 120A, due the 15th day of the 4th month (April 15). 4.9% rate, $50 minimum tax
Texas No income tax return Franchise tax instead. A qualifying HOA applies for exemption on Form AP-206; without an exemption the entity files franchise reports, due May 15. At or below the $2,650,000 no-tax-due threshold for 2026 and 2027, file the Public Information Report or Ownership Information Report
Colorado Ask us Colorado publishes no homeowners-association rule in its C corporation guidance; we check each association’s facts. Colorado C corporation returns are due May 15 for calendar-year filers, with an automatic six-month extension

Two rows deserve a sentence more. Oregon’s own instructions put it plainly — “Don’t file Form OR-20 if you don’t have nonexempt function income for Oregon tax purposes. Only file a copy of your federal Form 1120-H with us” — so an Oregon association with nothing but assessments and a checking account sends Oregon a copy and stops. Arizona goes the other way: “Homeowners associations that file federal Form 1120-H or federal Form 1120 are not exempt from Arizona income tax. These associations must file an Arizona corporate income tax return on Arizona Form 120 or Arizona Form 120A.” An Arizona association that files only the federal return is not finished.

California is the one to get advice on rather than to read off a table. An association that has been granted California exempt status under R&TC Section 23701t files Form 100 once nonexempt function income passes $100, and Form 199 once average gross receipts pass $50,000. An association that never obtained that status is treated as an ordinary corporation on Form 100, and if it is incorporated it pays “minimum franchise tax or measured tax, whichever is greater.” Plenty of California associations are in the second category without knowing it.

Sources: Washington DOR — homeowners associations; Oregon DOR — nonprofit, co-ops and HOAs and the 2025 Form OR-20 instructions; FTB Publication 1028; Florida DOR corporate income tax FAQ; Arizona Form 120 instructions (2025); Texas Comptroller — HOA exemption and franchise tax; Colorado DOR — DR 0112 C corporation filing guide.

Other states on request, same $100.

Behind on filings?

A missed year is not the trouble the board fears — if it is caught in time. A Form 1120-H can be filed up to 12 months after its due date, including extensions (Regulations section 301.9100-2). For a calendar-year association, the 2025 return can still go on Form 1120-H until April 15, 2027, or October 15, 2027 if an extension was filed. Inside that window we prepare the year at the same $175, using that year’s statements, and the election is made year by year, so each year is its own return.

The financial exposure is usually small, and the IRS instructions are the reason: the failure-to-file penalty runs at 5% of unpaid tax per month to a 25% maximum, and the minimum penalty on a return over 60 days late is capped at “the smaller of the tax due or $525.” An association whose only nonexempt income was reserve interest owes little tax, so it owes little penalty. That is a statement about arithmetic, not a promise about your association — a year with a large clubhouse rental, a settlement, or nonmember revenue can look very different, and we will tell you before we file.

A year more than 12 months past its due date cannot be filed on Form 1120-H. It has to be prepared on Form 1120, the full corporate return, where assessments are not excluded from income by Section 528 — a different return with a different result, which we quote separately after looking at the years involved. We do not promise a Form 1120-H for a year that is past its window, and you should be wary of anyone who does.

The IRS also offers First Time Abate relief for a first slip, but it requires the same return to have been “timely filed for the prior three years” — which is precisely why it rarely rescues an association that has never filed at all. Getting current is what fixes it.

If you think a year was missed, tell us now. The 12-month window is the difference between a $175 return and a corporate return.

Frequently asked questions

Yes. An association is a corporation for federal tax purposes whether or not it makes a profit, and whether or not it is incorporated in your state. Most residential associations file Form 1120-H, which excludes member assessments from taxable income. Filing is not optional just because the association’s only nonexempt income was a few hundred dollars of bank interest.

Form 1120-H is the two-page federal income tax return for homeowners associations under Internal Revenue Code Section 528. Filing it is an election: assessments and member fees are excluded from income as exempt function income, and the association is taxed at a flat 30% (32% for timeshare associations) on what remains, after a $100 specific deduction. For most associations, what remains is interest on reserves.

Dynamite Management charges $175 flat for federal Form 1120-H preparation, any state, any size association, and $100 more for a state return where one is owed. There is no hourly billing and no per-schedule add-on. The return is included at no extra charge on the HOA Fiscal Managed plan. A Form 1120 for an association that does not qualify or does not elect is quoted separately.

For a calendar-year association, April 15 — the 15th day of the 4th month after year end. An association with a fiscal year ending June 30 files by the 15th day of the 3rd month, September 15. Any other fiscal year is the 15th day of the 4th month after year end. If the date lands on a weekend or legal holiday, the next business day works. Form 7004 buys an automatic six-month extension of time to file, not to pay.

Yes, but only for 12 months. The IRS instructions say the election “must generally be made by the due date, including extensions,” and allow an automatic 12-month extension to make it if the return is filed within 12 months of that due date (Regulations section 301.9100-2). After that, the year can no longer be filed on Form 1120-H and has to go on Form 1120, where assessments are not excluded. Late filing also runs 5% of unpaid tax per month up to 25%. File the extension if you are going to be late.

It depends on the state, and the answers are not consistent. Florida does not require a return from an association that files federal 1120-H. Arizona requires one in so many words. Oregon requires Form OR-20 only if there is nonexempt function income. California usually wants Form 100 once nonexempt income passes $100. Washington and Texas have no corporate income tax. See the state table above; where one is owed, we prepare it for $100.

The year-end balance sheet, the income statement, general ledger detail, December bank and investment statements, any Forms 1099-INT, and last year’s return if the association has one. If an amenity was rented to nonmembers or the association has a cell-tower or antenna lease, send those agreements too. On HOA Fiscal we pull all of it from the ledger and only ask you for the 1099s.

Yes. Dynamite Management prepares Form 1120-H for associations in every state. The work is administrative and financial and is done remotely — we are not on site, and the price does not change with your location. The state return, if your state requires one, is the same $100 anywhere.

Form 1120-H preparation — $175 flat, any state. Send the year-end statements; get back a signed-ready return, the filed copy for the official records, and a one-page memo for the board. State return $100 more where one is owed, included on the HOA Fiscal Managed plan. Engagement letters go out in December. Get in touch.

Prices set by Dynamite Management. Deadlines, penalties and eligibility tests from the IRS Instructions for Form 1120-H; state rules from each state's revenue department, as linked above. Last checked September 9, 2026. General information for board members, not tax advice for a particular association.