What IRS Form 1120-H (2024) Is For
IRS Form 1120-H (2024) is the income tax return used by homeowners' associations seeking certain tax benefits under Internal Revenue Code Section 528. It allows qualifying associations to exclude exempt function income, including membership dues, fees, and assessments used for association property and the provision of association services. Exempt function income consists of amounts paid by owners and is not part of gross income.
The form taxes only non-exempt income received during the tax year, after deducting $100. Taxable income is taxed at a 30% tax rate for residential HOAs and 32% for timeshare associations. Using this corporation income tax return instead of Form 1120 simplifies reporting and adheres to the Internal Revenue Service's instructions.
When You’d Use Form 1120-H for 2024 (Late or Amended Filing)
Associations file Form 1120-H when they meet certain conditions, including the passage of the 60% income test and 90% expenditure test. A late filing occurs when the association misses the April 15, 2025, due date or the extended September 15, 2025, deadline. Many associations file late after receiving notices from the IRS or discovering that prior-year tax returns were never submitted.
An amended return is used to correct errors such as misclassified income, incorrect reporting of exempt function income, or missing deductions. Filing requirements must be followed carefully because the Internal Revenue Service may require the association to submit Form 1120 instead, which uses different tax rates, recognizes capital gains, tax credits, and profit calculations, and determines federal tax paid based on net income rather than fixed percentages. Associations should evaluate the correct tax form before filing, especially when earlier filings or accounting records contain errors.
Key Rules Specific to 2024
- Higher minimum late filing penalty: The minimum penalty increased to $510 for tax returns filed more than 60 days after the due date.
- New Electronic Filing Availability: Electronic filing for Form 1120-H became available starting January 2025 for associations that meet the requirements.
- Mandatory e-file threshold: Associations filing 10 or more tax forms of any type must electronically file Form 1120-H to meet the filing requirements.
- Flat tax rates: Tax rates remain 30% for condominium management association filings and 32% for timeshare associations.
- Qualification tests required: Associations must pass the 60% income test and 90% expenditure test to be eligible for certain tax benefits under Section 528.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
- Gather IRS transcripts: Request IRS Form 4506-T or use your IRS business account to verify past tax returns, federal tax paid, tax-exempt interest received, and any unpaid tax recorded for the tax year.
- Prepare Form 1120-H: Use the correct IRS Form 1120-H (2024) version and check the amended return box if the filing corrects a prior income tax return.
- Attach additional forms: Include any additional forms, such as credit schedules or other documents required under separate instructions, to ensure accurate reporting.
- Select a filing method: File Form 1120-H electronically when required or mail it to the address listed for Kansas City, MO, or Ogden, UT, depending on the association’s location.
- Maintain proper documentation: Keep signed copies, receipts, accounting records, income received, total deductions, and all supporting documentation for review by the Internal Revenue Service.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Misclassifying exempt function income: Report exempt function income accurately and include only non-member amounts in taxable income to avoid errors affecting tax liability.
- Failing the 60%/90% tests: Verify that the association meets both tests to ensure it qualifies to file Form 1120-H instead of Form 1120.
- Using the incorrect tax form: Always use the IRS Form 1120-H (2024) version to ensure accuracy and prevent processing delays.
- Forgetting to check the amended return box: Check the amended return box when correcting previous filings to ensure proper IRS handling.
- Submitting an unsigned return: Ensure that an authorized officer or paid preparer signs the return, as missing signatures can cause rejections.
- Ignoring e-file requirements: Confirm whether e-filing is mandatory and file electronically when required to avoid Internal Revenue Service penalties.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The IRS processes paper filings within 6–8 weeks and electronically filed returns within 2–3 weeks. Amended returns may take 8–12 weeks to process. Associations may receive Internal Revenue Service notices requesting clarification of income, expenses, deductions, or classification of exempt function income.
If the association is required to pay tax, payment plans may be available for eligible balances. Payments reduce interest and penalties applied to unpaid tax. Keeping all tax forms, documentation of expenditures, real estate taxes, fees, and credits claimed helps associations respond quickly to requests. A tax professional can help when questions arise about accounting records, federal tax calculations, or the interpretation of Internal Revenue Code provisions.
FAQs
How do I request transcripts for IRS Form 1120-H (2024) or earlier returns?
You can request IRS transcripts through IRS Form 4506-T or your IRS business account. These records show activity on the income tax return, federal tax paid, assessments, and account details that help homeowners' associations prepare accurate filings or correct an amended return.
What qualifies as exempt function income for homeowners' associations?
Exempt function income includes membership dues, fees, and assessments used to maintain association property and provide the association’s services. When a homeowners' association files Form 1120-H, it must separate exempt and non-exempt income to determine taxable income and ensure compliance with filing requirements.
How does Form 1120-H differ from Form 1120 or other forms used for an income tax return?
Form 1120-H is a simplified tax form available to homeowner associations that meet the requirements of Section 528 of the Internal Revenue Code. Form 1120 and other forms require detailed reporting of net income, capital gains, profit, deductions, and credits, and may result in different tax rates. Associations should review their tax year activity to determine the appropriate filing.
When should a homeowners' association file Form 1120-H instead of other forms?
A homeowners association should file Form 1120-H when it meets the 60% income and 90% expenditure tests and wishes to claim certain tax benefits. Filing requirements differ from other forms, and a paid preparer or tax professional can help determine eligibility for the correct tax form.
What is the due date for filing Form 1120-H, and what happens if you miss it?
The due date is April 15 for calendar year taxpayers, with an extension available to September 15. Late filing may result in penalties, interest, additional tax liability, or notices from the Internal Revenue Service. Filing Form 1120-H late or correcting multiple years with an amended return may require documentation explaining the delay.
