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1. HOAs are generally not eligible as a IRS 501c3 because they do not serve the public good, rather they serve their members by managing association property for the private benefit of those owners.
2.  1120 H is the federal tax return  that an association files.  Exemption function revenue (dues) is generally tax exempt, while interest dividends and rental income from non owners,  less applicable expenses is generally taxable.  The tax rate is a flat 30% after a $100 income exemption.

1. HOAs are generally not eligible as a IRS 501c3 because they do not serve the public good, rather they serve their members by managing association property for the private benefit of those owners.
2.  1120 H is the federal tax return  that an association files.  Exemption function revenue (dues) is generally tax exempt, while interest dividends and rental income from non owners,  less applicable expenses is generally taxable.  The tax rate is a flat 30% after a $100 income exemption.

Thank you!  This has been an issue I wanted to research.  Now, I can check that off my list.

Carol,

It is rarely a benefit for an association to apply for 501(c) status.  It costs to register and also maintaining the information may be time consuming, and usually requires additional forms to be filed with the state as well.  

If your are filing an 1120H and aren't paying much tax, I wouldn't see much of a benefit to registering as a 501(c).  The 1120H exempts regular member assessments anyway, so likely the only thing that would be taxable would be other types of income such as interest income from the bank, unless you have other ancillary operations that are run by your association.  

If you are paying taxes under 1120H feel free to give me a call if you want to go over your specific situation.

Thank you,

I'm so glad you posted this.  Our association's organizational documents describe us as a not-for-profit corporation under PA not-for-profit law.  We file 1120H.  We are not 501(c), and I've wondered if we should apply to be.  Does the 1120H offer the same tax benefit?  Under what circumstances would it be beneficial for an association to pursue federal tax exemption?  Would there be additional benefits to doing so?  I would also expect greater complexity of record keeping that would need to be considered.