Common HOA Board Member Mistakes > Not Understanding Your Taxes
In our two previous posts, we discussed some of the major pitfalls that HOA members can avoid. First, we covered financial management, which is a huge factor in any HOA’s success. Now, it’s time to cover some tax tips for these associations. In addition to addressing your insurance needs with an LA HOA Insurance policy, consider the following tips to prevent making a serious tax mistake year.
Knowing when to pay.
Unlike regular individuals, HOAs have different due dates for submitting their taxes. According to HOA Leader, if your association follows a calendar-year accounting method, you’re required to file association tax returns by March 15 of every year. If your association doesn’t follow calendar-year accounting, its taxes are due on the 15th day after the third month of your taxable year. So if your calendar year ends on July 31, your tax return is due on Dec. 15.
If you made the mistake of not looking into the tax due dates, the good news is that you can file for an extension. However, if you file for an extension, your HOA will be held liable for paying the interest that accrues during the late period that the taxes weren’t paid.
Will my HOA owe money?
The majority of HOAs do not owe the government money, and this is simply because HOAs collect money from their residents to pay for upkeep and regular expenses, they do not generate income. However, speak with your tax professional to ensure you aren’t involving your HOA in income-generating activities without your knowledge.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOAs like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions, and Restrictions (CC&R), exposing the board, HOA and management to lawsuits – which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (818) 879-5980 ext. 201, or fill out our online form.