Tax season is officially underway, and for Chicago condo board members, now is the time to ensure your association’s financial records are organized and ready for filing. Understanding deadlines, filing requirements, and key tax considerations can help your association remain compliant and avoid unnecessary penalties.
The federal tax filing deadline for most condo associations is April 15 (for calendar-year associations). Filing on time is critical, as late filings can result in penalties and interest charges. Many associations work closely with their CPA or property management company to prepare and file returns electronically, which helps streamline the process and maintain proper documentation.
Understanding Association Tax Filing Requirements
Condo associations are required to file a federal tax return annually, even if they are nonprofit corporations. Most associations file one of the following:
- Form 1120-H (U.S. Income Tax Return for Homeowners Associations), which offers a simplified method of filing but applies a flat tax rate to non-exempt income.
- Form 1120 (standard corporate return), which may provide tax advantages in certain situations but involves more detailed reporting.
- Form IL-1120 (Illinois Corporation Income and Replacement Tax Return), required if your association has federal taxable income.
Determining which form is most beneficial depends on your association’s revenue sources, including assessments, reserve interest income, rental income from common elements, or other non-dues revenue streams. This is an important discussion to have with your association’s tax professional.
Key Financial Documents to Prepare
To file accurately and efficiently, board members should ensure the following records are organized:
- Year-end financial statements
- Balance sheet and income statement
- Documentation of reserve accounts and interest earned
- Records of special assessments or capital improvement projects
- Vendor payment records and 1099 filings (if applicable)
Maintaining clean and consistent bookkeeping throughout the year makes tax season significantly easier and supports transparency for unit owners.
Property Taxes and the Association
While individual unit owners pay property taxes on their units, associations may have tax obligations related to:
- Taxable common areas (if applicable)
- Commercial units owned by the association
- Parking units or storage units held in the association’s name
Board members should confirm whether any association-owned property requires separate property tax filings or payments.
Good Governance During Tax Season
Tax season is also a good time for boards to:
- Review reserve funding strategies
- Evaluate long-term capital planning
- Confirm compliance with federal and Illinois corporate requirements
- Ensure annual reports with the State of Illinois are filed and up to date
Proper tax filing is not just about compliance — it’s part of responsible financial stewardship.
Taxes don’t exist in a vacuum; they are closely tied to your association’s overall financial health. From reserve planning to long-term capital improvement strategies, strong financial guidance helps boards make informed decisions that protect both property values and homeowners’ investments.
Learn how Haus Financial Services supports Chicago condo associations and board members with financial reporting and compliance requirements.
