Homeowners Associations are required by law to file taxes each year and it can be a tricky process to try and navigate. Each state has its own specific requirements and Utah is no exception, this article will help guide you through the first step in meeting these requirements and successfully filing an HOA tax return. Many people run into problems while trying to accomplish this task, the main one being the lack instruction that is readily available to the community. Tax professionals even often lack this important information!
Even when you have filed a Utah HOA tax return in past years it can still be a challenging process that just does not seem to get simpler. The lack of information for intake plus the decision that is needed to be made each year on how you will file can be difficult. Every year homeowners associations have to decide whether to file one of two different ways.
HOAs can be filed in two different ways:
To file as a corporation.
To file under IRC Section 528.
Most HOAs choose the second option because under IRC Section 528 if all or nearly all the income received comes from assessments items and most of the expenses are from maintenance work then there will be more no tax liability. To qualify under IRC 528, the following requirements 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 this basic understanding of your filing options the task becomes much simpler but it is important that you examine the often overlooked tax issues presented uniquely in Utah. To best guarantee that you are in compliance with Utah state tax laws it is recommended that you employ a qualified CPA or tax professional with extensive knowledge in the area.
We are an HOA CPA and we serve the Utah communities of: Alpine, Alta, Altamont, Alton, Altonah, American Fork, Aneth, Annabella, Antimony, Apple Valley, Aurora, Axtell, Bear River City, Beaver, Beryl, Bicknell, Bingham Canyon, Blanding, Bluebell, Bluff, Bluffdale, Bonanza, Boulder, Bountiful, Brian Head, Bridgeland, Brigham City, Bryce, Bryce Canyon, Cache Junction, Cannonville, Castle Dale, Castle Valley, Cedar City, Cedar Hills, Cedar Valley, Centerfield, Centerville, Central, Charleston, Chester, Circleville, Cisco, Clarkston, Clawson, Clearfield, Cleveland, Clinton, Coalville, Collinston, Corinne, Cornish, Cottonwood Heights, Croydon, Dammeron Valley, Delta, Deweyville, Draper, Duchesne, Duck Creek Village, Dugway, Dutch John, Eagle Mountain, East Carbon, Echo, Eden, Elberta, Elk Ridge, Elmo, Elsinore, Emery, Enoch City, Enterprise, Ephraim, Escalante, Eureka, Fairview, Farmington, Fayette, Ferron, Fielding, Fillmore, Fort Duchesne, Fountain Green, Fruit Heights, Fruitland, Garden City, Garland, Garrison, Genola, Glendale, Glenwood, Goshen, Grantsville, Green River, Greenville, Greenwich, Grouse Creek, Gunlock, Gunnison, Gusher, Hanksville, Hanna, Harrisville, Hatch, Heber, Heber City, Helper, Henefer, Henrieville, Herriman, Hiawatha, Highland, Hildale City, Hill Afb, Hinckley, Holden, Holladay, Honeyville, Hooper, Howell, Huntington, Huntsville, Hurricane, Hyde Park, Hyrum, Ibapah, Interlaken, Ivins, Jensen, Joseph, Junction, Kamas, Kanab, Kanarraville, Kanosh, Kaysville, Kearns, Kenilworth, Kingston, Koosharem, La Sal, La Verkin, Lake Powell, Laketown, Lapoint, Layton, Leamington, Leeds, Lehi, Levan, Lewiston, Lindon, Loa, Logan, Lyman, Lynndyl, Magna, Manila, Manti, Mantua, Mapleton, Marysvale, Mayfield, Meadow, Mendon, Mexican Hat, Midvale, Midvale City, Midway, Milford, Millville, Minersville, Moab, Modena, Mona, Monroe, Montezuma Creek, Monticello, Monument Valley, Morgan, Moroni, Mount Carmel, Mountain Home, Mt. Pleasant, Mt. Pleasant, Murray, Myton, Neola, Nephi, Nephi City, New Harmony, Newcastle, Newton, Nibley, North Logan, North Ogden, North Salt Lake, Oak City, Oakley, Oasis, Ogden, Orangeville, Orderville, Orem, Panguitch, Paradise, Paragonah, Park City, Park Valley, Parowan, Payson, Peoa, Perry, Pine Valley, Plain City, Pleasant Grove, Pleasant View City, Plymouth, Portage, Price, Providence, Provo, Randlett, Randolph, Redmond, Richfield, Richmond, River Heights, Riverdale, Riverside, Riverton, Rockville, Roosevelt, Roy City, Rush Valley, Saint George, Salem, Salina, Salt Lake City, Sandy, Santa Clara, Santaquin, Saratoga Springs, Scipio, Sevier, Sigurd, Smithfield, Snowville, South Jordan, South Ogden, South Salt Lake, South Weber, Spanish Fork, Spring City, Springdale, Springville, St George, Sterling, Stockton, Summit, Sunnyside, Sunset, Syracuse, Tabiona, Talmage, Taylorsville, Teasdale, Thompson, Tooele, Toquerville, Torrey, Tremonton, Trenton, Tridell, Tropic, Vernal, Vernon, Veyo, Vineyard, Virgin, Wales, Wallsburg, Washington City, Washington Terrace, Wellington, Wellsville, Wendover, West Bountiful, West Jordan, West Valley, Whiterocks, Willard, Woodruff, Woods Cross, Francis, Hideout, Naples City