What IRS Form 1120-H (2022) Is For

Form 1120-H is the U.S. Income Tax Return for Homeowners Associations that elect to take advantage of special tax benefits under Section 528 of the Internal Revenue Code (IRS Instructions for Form 1120-H (2022)). It allows qualifying condominium, residential real estate, and timeshare associations to exclude exempt function income while paying a flat tax on non-exempt income.

When You’d Use Form 1120-H for 2022 (Late or Amended Filing)

You would file Form 1120-H for 2022 as a late or amended return if your association missed the original due date or needs to correct a prior filing. Common scenarios include IRS notices for unfiled returns, errors in exempt income reporting, or missed elections. Late filing risks losing Section 528 benefits unless regulatory relief applies.

Key Rules Specific to 2022

• Must pass the 60% gross income and 90% expenditure tests
  
  
• Flat rates: 30% for condominium and residential associations, 32% for timeshare associations
  
  
• Section 528 election required annually through timely filing
  
  
• Minimum penalty: $450 or tax due (whichever is smaller) for returns filed more than 60 days late
  
  
• Incorrect classification of income can jeopardize eligibility
  
  

Step-by-Step (High Level)

• Gather IRS transcripts: Use Form 4506-T for account records
• Complete the 2022 Form 1120-H: Ensure correct calculations and election boxes
• Attach schedules: Organize all supporting forms in proper order
• File method: Mail to the correct IRS center or use approved e-file providers
• Retain records: Keep copies of the return, schedules, and mailing or e-file confirmations

Common Mistakes and How to Avoid Them

• Misclassifying per-use fees or non-member payments as exempt income
  
  
• Failing the 60% or 90% qualification tests required for election
  
  
• Applying incorrect tax rates or using corporate tax brackets instead
  
  
• Omitting the $100 specific deduction against non-exempt income
  
  
• Missing the filing deadline and forfeiting Form 1120-H eligibility
  
  
• Providing incomplete or inaccurate entity identification on the form
  
  

What Happens After You File

The IRS typically processes e-filed returns faster than paper submissions, though late filings may take several months. Notices may request clarification or propose adjustments. If you owe tax, penalties and interest apply from the original deadline. Payment options include installment agreements through IRS.gov/OPA. If you disagree with adjustments, you may appeal through IRS Appeals or petition Tax Court.

FAQs

Can I still file Form 1120-H for 2022 if I missed the deadline?

Yes, you may file late, but your association forfeits the Section 528 election unless it qualifies for the automatic 12-month extension provided under regulations. Beyond that period, the IRS requires filing Form 1120 instead. Filing promptly ensures compliance, minimizes penalties, and establishes accurate tax records even if the election benefit cannot be applied.

What penalties apply to late-filed Form 1120-H returns?

Penalties are significant. Failure-to-file penalties equal 5% of unpaid tax per month, up to a 25% maximum. For 2022 returns filed more than 60 days late, the minimum penalty is $450 or 100% of the unpaid tax, whichever is smaller. Interest also accrues continuously on both unpaid taxes and penalties until the balance is fully paid.

How do I get transcripts for my homeowners association?

Associations can request IRS transcripts using Form 4506-T or through the IRS Business Online Transcript Service. You’ll need the association’s EIN, name, and signature of an authorized officer. Transcripts help confirm if the IRS has record of prior filings, payments, or penalties, ensuring your late or amended filing matches the IRS’s existing account records.

Is there a refund statute of limitations for 2022?

Yes, refunds must be claimed within three years of the original return due date, typically April 15, 2026, or the extended deadline if an extension was filed. Returns filed after this window are still processed for compliance purposes, but any overpayments are forfeited. Associations should act within the timeframe to preserve refund rights.

Should I amend my state return if I file an amended federal Form 1120-H?

In most states, yes. States often conform to federal filing changes, meaning that if you amend your federal return, you may need to amend your state return as well. Deadlines, requirements, and penalties vary by jurisdiction, so check with your state’s tax authority to ensure timely compliance and avoid additional state-level liabilities.

What’s the difference between exempt and non-exempt function income?

Exempt function income comes from member assessments, dues, and fees used to maintain common property or facilities. Non-exempt income includes revenue from non-members, facility rental charges, special use fees, and investment income. Properly distinguishing between the two categories ensures compliance with IRS requirements and preserves eligibility for filing Form 1120-H benefits under Section 528.

Can I e-file Form 1120-H for 2022?

Yes, electronic filing is available for Form 1120-H through IRS-authorized providers. E-filing is faster, reduces errors, and provides immediate confirmation of receipt. However, some associations still prefer mailing paper returns. Choosing e-file helps minimize processing delays and ensures faster response times if IRS notices or additional information requests are later issued.

‍