When do community associations need to vote to roll over surplus funds to the next fiscal year?

Monica Johnson

Monica Johnson

In order to avoid adverse tax consequences, community associations should consider conducting a vote to apply surplus funds in their operating budgets at the end of their fiscal year to the budgets for their next fiscal year.

The two common tax return filing options for associations are form 1120, referred to as the corporate income tax return, and form 1120-H, which is used by associations to take advantage of certain tax benefits that allow associations to exclude certain income (membership dues, fees, or assessments) from their gross, taxable income.  Associations should consult with their accountants to determine which type of tax return they will file, as there are different qualifications and benefits for each. Continue reading