The purpose of this article is to assist you in successfully filing a Homeowners Association tax return in compliance with the state of Wyoming tax laws. Many times, tax questions surrounding HOAs can be very difficult to answer- each state has its own specific standards.
Even tax professionals can often be unknowing of the information pertaining to the state’s filing requirements for HOAs when it comes to conversations about these types of tax returns. Throughout this article you will become familiar with the federal requirements for HOA returns in Wyoming.
Whether or not you have filed a Wyoming HOA tax return in past years, the process does not seem to ever get simpler. The lack of information readily available in this tax area is a huge source of the problems you most likely face when trying to file.
This is a complex task that has different requirements in each state, sometimes not having any filing requirements in one state or having complex requirements in another. Another issue that complicates homeowner association tax returns is the fact that every year the HOA has to decide whether to file either one of two ways.
HOAs can be filed at in two different ways when it pertains to filing a tax return:
To file as a corporation.
To file under IRC Section 528.
Most HOAs opt for the second option because under IRC Section 528 if nearly all the income received comes from assessments and most of the expenses are from maintenance work then there will be more no tax liability. To qualify under IRC 528, the following must be met:
- At least 85% of the units must be used as residences.
- A minimum of 60% of the association’s gross income must be received from owners in their capacity as HOA members and not as customers of goods or services.
- At least 90% of the HOA’s expenses must be for operating and capital expenses that relate to the HOA’s exempt function.
- Any residual income may not be used for the benefit of the members.
After you have begun to grasp the always difficult federal requirements for HOA tax returns it is crucial that you take a look at the often overlooked tax issues presented by each individual state. To ensure you are in compliance with Wyoming tax laws be sure to employ a qualified CPA or tax professional who understands these complexities.
Serving the Wyoming communities of: Casper, Cheyenne, Cody, Douglas, Evanston, Gillette, Green River, Kemmerer, Lander, Laramie, Newcastle, Powell, Rawlins, Riverton, Rock Springs, Sheridan, Torrington, Worland.