This post is intended to help you successfully file a homeowners association tax return in the state of Missouri. Often, tax issues surrounding HOAs can be very difficult to navigate – each state has its own unique requirements. Tax professionals often lack the information pertaining to the state’s filing requirements for HOAs when it comes to conversations about tax returns. Throughout this article we will become familiar with the federal requirements for HOA returns in Missouri.
Whether or not you have filed a Missouri HOA tax return in the past, the process will never get easier. The lack of information readily available in this tax area is the source of the challenges we face when trying to file. This is a complex task that has different expectations in each state, perhaps not having any filing requirements in one state to complex requirements in another. Another thing 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.
Missouri HOA Tax Return Filing Options
Missouri HOAs have the option to file as a corporation or to under IRC Section 528. Most HOAs choose 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.
Once you have begun grasping the always challenging federal requirements for HOAs it is critical that you examine the often overlooked tax issues presented by each individual state. To ensure you are in compliance with Missouri tax laws be sure to employ a qualified CPA or tax professional who understands these complexities.
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