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Paul Taliefero
Paul Taliefero, Enrolled Agent
Category: Tax
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Experience:  19 years of experience in income taxes
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notary tax laws

Customer Question

If I recieve $50 for a signing and I notaize 3 documents, can I deduct $10 for each notarizaton i witness

Submitted: 11 years ago.
Category: Tax
Expert:  JBE, CPA replied 11 years ago.
If you receive $50 for notarizing documents you may deduct the ordinary and necessary business expenses associated with earning the $50. You can not simply deduct a $10 per notarizaton fee without some basis or documentation of the associated expenses.

The good news is that notary income is exempt from self employment taxes.

JBE, CPA
Expert:  Paul Taliefero replied 11 years ago.
 What does $10.00 have to do with notarizing a document?
Customer: replied 11 years ago.
Reply to Paul Taliefero's Post: I am a contract notary I witness mortgage refinance documents, I go to the customers home, my average fee for doing this is $50. I was told I could deduct $10 for each notarization (3 documents $30)from the money I report to IRS. Is this true?
Expert:  Paul Taliefero replied 11 years ago.
 In that case, what you were told by JBE is correct.
Paul Taliefero, Enrolled Agent
Category: Tax
Satisfied Customers: 239
Experience: 19 years of experience in income taxes
Paul Taliefero and 2 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
What do you mean by self employment taxes?
Expert:  JBE, CPA replied 11 years ago.
You cannot deduct a $10 per document fee and report the difference to the IRS as your taxable income. You may, however, deduct any out-of-pocket expenses that you incur such as auto mileage, telephone, supplies, licensing fees, insurance bonds, etc., that are assaociated with earning your notary income.

Self employment tax is a tax of 15.3% on the net income that an individual earns. This tax is equivalent to the Social Security tax. Notary income is by statute exempt from the self employment tax.

In some states notary fees are incidental income but in other states, such as California, its not uncommon for a notary to make in excess of $100,000 annually.

JBE, CPA
Customer: replied 11 years ago.
Reply to JBE, CPA's Post: I just had my taxes done and the accountant filed "Schedule SE" and entered line 6, into "Form 1040 line 30" Can you tell me where I can find the information to back this up?
Expert:  JBE, CPA replied 11 years ago.
b) Meaning of public office. -- The term "public office" includes any elective or appointive office of the United States or any possession thereof, of the District of Columbia, of a State or its political subdivisions, or of a wholly-owned instrumentality of any one or more of the foregoing. For example, the President, the Vice President, a governor, a mayor, the Secretary of State, a member of Congress, a State representative, a county commissioner, a judge, a justice of the peace, a county or city attorney, a marshal, a sheriff, a constable, a registrar of deeds, or a [Previous Term] notary public performs the functions of a public office. (However, the service of a notary public could not be made the subject of a section 218 agreement under the Social Security Act because notaries are not "employees" within the meaning of that section. Accordingly, such service does not constitute a trade or business.) [Reg. §1.1402(c)-2.]


JBE, CPA
Customer: replied 11 years ago.
MY GROSS INCOME FOR 2004 WAS $28,000.00 AFTER DEDUCTIONS IT WAS ABOUT $20,000.00. ALL OF THIS FROM BEING A NOTARY, I HAVE NO OTHER INCOME,(MY WIFE WORKS WE FILL JOINTLY) THIS IS MY MAIN SOURCE OF INCOME. THAN WHAT YOU ARE SAYING IS THAT I DO NOT HAVE TO PAY SELF EMPLOYMENT TAXES.(FILE FORM SCHEDULE SE) MY TAX ADVISOR IS RELUCTANT TO DO THIS.I WILL PAY FOR A REPLY, THANK YOU FOR YOUR HELP.
Expert:  Sandi Hargrove, SkyHawks replied 11 years ago.

 http://www.irs.gov/instructions/i1040sse/ar02.html


The above link can be reviewed by your tax advisor to prove that the income is excluded for SE Tax.

Expert:  JBE, CPA replied 11 years ago.
Here is a copy of the code sections once again. Simply copy it and provide it to your preparer:

b) Meaning of public office. -- The term "public office" includes any elective or appointive office of the United States or any possession thereof, of the District of Columbia, of a State or its political subdivisions, or of a wholly-owned instrumentality of any one or more of the foregoing. For example, the President, the Vice President, a governor, a mayor, the Secretary of State, a member of Congress, a State representative, a county commissioner, a judge, a justice of the peace, a county or city attorney, a marshal, a sheriff, a constable, a registrar of deeds, or a [Previous Term] notary public performs the functions of a public office. (However, the service of a notary public could not be made the subject of a section 218 agreement under the Social Security Act because notaries are not "employees" within the meaning of that section. Accordingly, such service does not constitute a trade or business.) [Reg. §1.1402(c)-2.]

You are not subject to self employment taxes on your net income from notary fees.

JBE, CPA

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