IRS Form 1120-H (2015): Tax Return for HOAs

IRS Form 1120-H is the income tax return for homeowners' associations electing tax benefits under Internal Revenue Code Section 528. Filing correctly for 2015 allows qualifying associations to exclude exempt function income and pay tax only on non-exempt income.

Late Filers

A late 2015 Form 1120-H can still be filed, though the failure-to-file penalty has likely already reached its 25% maximum.

Multiple Income Sources

HOAs earning income beyond membership dues and assessments — such as interest, rental fees, or investment income — must classify each source correctly.

Itemizing Deductions

Associations claiming the $100 deduction and allowable expenses must apply them only against taxable income. Misapplying deductions against exempt function income is a common error.

Claiming 2015 Credits

For 2015 Form 1120-H, enter applicable credits on line 21 and attach the appropriate form, such as Form 4136 for fuel credits.

IRS Compliance

Associations that fail to make the Section 528 election correctly may be required to file the more complex Form 1120 instead.

Citizens Abroad / Military

The filing address depends on where the association's principal business is located; foreign or U.S. possession filers use the Ogden, UT service center.

Use the official 2015 Form 1120-H and complete every section accurately to make the Section 528 election and correctly report taxable income for the tax year.

1. Gather Your Documents Before Starting

Before completing the 2015 Form 1120-H, collect the association's IRS account transcripts, bank records, board-approved financial statements, prior-year tax returns, and all documentation supporting income classification, expense allocation, and any credits claimed.

2. Confirm the Association Type and Tax Rate [2015] Only

Two distinct tax rates applied to Form 1120-H filers in 2015. Condominium management associations and residential real estate associations were taxed at 30 percent on taxable income. Timeshare associations were taxed at 32 percent. Confirm the association's classification carefully before entering the tax rate on the return, as using the wrong rate will produce an incorrect tax liability.

3. Report All Income on the Correct Lines

On the 2015 Form 1120-H, report gross income excluding exempt function income on lines 1–8: line 1 = dividends, line 2 = taxable interest, line 3 = gross rents, line 4 = gross royalties, line 5 = capital gain net income, line 6 = Form 4797 Part II line 17, line 7 = other income, and line 8 = total gross income excluding exempt function income.

4. Calculate Taxable Income

For 2015 Form 1120-H, report only gross income excluding exempt function income on lines 1–8, subtract directly connected deductions on lines 9–16, subtract the $100 specific deduction on line 18, and compute taxable income on line 19. The instructions do not provide a separate category of above-the-line adjustments for this form.

5. Apply the $100 Deduction and Confirm Expenditure Tests [2015] Only

The 2015 form allows a $100 deduction against taxable income. Before claiming Section 528 treatment, verify that the association meets both the 60 percent gross income test (at least 60 percent of gross income is exempt function income) and the 90 percent expenditure test (at least 90 percent of expenses are spent on exempt functions).

6. Attach Required Schedules [2015] Only

Attach Form 4136 if claiming the credit for federal tax paid on fuels. Penalty relief requests may be made by phone, in writing, or on Form 843 if needed. Form 1120-H is included in the IRS corporate e-file program.

Missing W-2s or Tax Records for 2015?

Homeowners associations filing a late or amended 2015 Form 1120-H should request IRS transcripts before completing the return. Transcripts confirm what income, payments, and prior filings are already on record with the IRS.

IRS Wage & Income Transcript

Form 4506-T can request wage and income transcripts, but these reflect information returns filed about the taxpayer, not a list of 1099s the association issued.

IRS Account Transcript

The IRS account transcript shows the association's 2015 filing history, payments received, penalties assessed, and interest accrued — making it the primary document to review before filing.

Social Security Administration

For business tax transcript needs, the IRS directs businesses to the Business Tax Account, Form 4506-T, or the IRS business tax line — the appropriate starting points for obtaining 2015 records.

Contact Prior Employers

If the association changed management or board leadership during or after 2015, prior officers or management companies may hold records and tax documents needed to complete the return.

Do not estimate income figures when completing the 2015 return — use IRS transcripts to ensure reported amounts match what the IRS already has on file.

Avoiding these errors before filing the 2015 Form 1120-H will reduce the risk of IRS notices, penalties, and processing delays.

• Using the wrong tax year form — Always use the correct 2015 Form 1120-H. IRS instructions do not confirm automatic rejection of wrong-year submissions, but filing the wrong version risks serious processing problems.
  
  
• Failing to make the Section 528 election — The election must be made on the return itself. Missing it forces the association to file the more complex Form 1120 and lose exempt function exclusions.
  
  
• Applying the wrong tax rate — Condominium management and residential real estate associations owe tax at 30 percent; timeshare associations owe 32 percent. Confusing the two produces an incorrect liability.
  
  
• Omitting the $100 deduction — This deduction reduces taxable income and must be applied before computing the tax owed. Leaving it out overstates the association's liability.
  
  
• Misclassifying exempt function income — Only membership dues, assessments, fees, and payments received from owners for association property qualify. Interest or facility income is taxable and must not be excluded.
  
  
• Assuming a refund is still available — The refund claim period generally closed March 15, 2019, or September 15, 2019, with a valid extension, subject to IRS lookback rules.
  
  
• Missing or incorrect EIN — The employer identification number on the return must match IRS records exactly. A mismatched or missing EIN will delay processing and may trigger compliance notices.
  
  
• Unsigned return — A paper-filed Form 1120-H for 2015 must be signed by an authorized officer of the association. An unsigned return is not considered validly filed.
  
  
• Missing attachments — Attach Form 4136 and applicable supporting forms when claiming credits. Penalty-relief requests may be handled by phone, in writing, or on Form 843. Form 1120-H supports e-filing.

What is IRS Form 1120-H (2015) used for?

IRS Form 1120-H is the annual income tax return for homeowners associations electing tax benefits under IRC Section 528. For 2015, eligible associations — including condominium management, residential real estate, and timeshare associations — could exclude exempt function income and pay tax at either 30 or 32 percent.

Can I still file IRS Form 1120-H for the 2015 tax year?

A 2015 Form 1120-H can still be filed — there is no statute of limitations when taxes are owed. The original due date was March 15, 2016. The failure-to-file penalty, capped at 25%, has likely already maxed out. Penalties and interest continue accruing on any unpaid balance.

What is the difference between exempt function income and taxable income on Form 1120-H?

Exempt function income — membership dues, assessments, and fees paid by owners to support association property — is excluded from gross income under Section 528. All other income, including interest and facility rental fees, is taxable. Correctly separating these categories is essential to calculating the right 2015 tax liability.

What happens if the association does not qualify for the Section 528 election?

Associations failing either the 60 percent gross income test or the 90 percent expenditure test for 2015 cannot use Form 1120-H. They must instead file Form 1120, which provides no exempt function income exclusion and subjects all net income to regular corporate tax rates.

How do we get IRS transcripts for the 2015 tax year?

Request IRS account transcripts for 2015 through the Business Tax Account portal or by submitting Form 4506-T by mail. Transcripts confirm prior filings, payments received, and penalties and interest assessed — reviewing them before completing the return helps ensure consistency with IRS records.

What is the minimum penalty for filing Form 1120-H more than 60 days late?

For a calendar-year 2015 Form 1120-H due in 2016, the minimum failure-to-file penalty for a return more than 60 days late was the lesser of unpaid tax or $205. This minimum applied even on small balances; if no tax was owed, the minimum penalty did not apply.

Can penalties assessed on the 2015 return be reduced or removed?

First-time abatement requires a clean compliance history for the prior 3 tax years and no unresolved penalties. Reasonable Cause relief is available when circumstances beyond the association's control prevented timely filing. Some requests are accepted by phone; others require a written submission or Form 843.

Should the association amend the 2015 return if errors are found after filing?

To amend a previously filed 2015 Form 1120-H, file a corrected Form 1120-H and check the "amended return" box. Errors involving income classification, tax rates, or deductions that result in understated liability will also require payment of any additional tax due, plus accrued interest.