Posted by KTF on 8/19/05 11:15am
Msg #60232

RE:Self emplyment tax and expense deductions

There are some misconceptions about self-employment tax and expense deductions. If someone is self-employed they are subject to self-employment taxes. ALL income must be claimed as income and then fees(such as notary fees) are deducted from the income which lowers the self-employment tax an individual would then owe. Expenses incurred with a business or self-employed individual(such as mileage, office supplies, utilities, advertising, insurance, licenses, etc.)are deductible. If these items were not deductible there would be no place on the Schedule C to put them. However the IRS requires that all receipts be retained for verification purposes. They also require that a DETAILED journal or log be kept to prove any mileage that is being claimed. Please refer to the instructions on how to fill out the Schedule C. I hope this helps all of those who may have been misled by the misinformed few.

Reply by Bonnie/FL on 8/19/05 11:18am
Msg #60235

Got it and I concur. I keep all receipts, keep accurate records and understand what you are saying and agree. Thank you.

Reply by LilyMD on 8/19/05 11:23am
Msg #60240

After having read the previous threads on this subject, I must say that I hope someone will get a new CPA...perhaps one with a working knowledge of IRS law/regulations. I found all of this to be true simply by looking up a schedule C at the IRS website.

Reply by NY_TaxLady on 8/19/05 12:35pm
Msg #60303

Notary work is not subject to SE tax but is subject to Federal tax. Look it up in Pub 17.

Reply by BLE on 8/19/05 2:12pm
Msg #60383

So which is it? To tax or not to tax????

Reply by NY_TaxLady on 8/19/05 2:24pm
Msg #60387

Your Signing fees are taxable and subject to SE tax . Your notary signatures are taxable but not subject to SE tax. You can subtracted them from your signing fees and add it as other income not subject to SE.

Reply by thnotary_NY on 8/19/05 2:30pm
Msg #60389

If you are fortunate to have made enough to be subject to the SE tax then the total amount of the fees will help to offset the tax.

Reply by thnotary_NY on 8/19/05 2:32pm
Msg #60390

Let me amend that to notarial fees, not travel fees.

Reply by Brenda_NC on 8/19/05 2:35pm
Msg #60395

I called the IRS number to ask due to the confusion. I was told that you must claim all of your income as gross income. Then when you fill out the Schedule SE, in the dotted area next to #3 you write in the words "Exempt Notary" then you list your total notary fees. Then you subtract that amount from line 2 on the Sch. SE and enter that amount in the box for line 3. Then continue on with the form.

Reply by Roger/OH on 8/19/05 2:40pm
Msg #60399

And if you use TurboTax, it will ask if you are a notary and put the amount in the proper place for you on the form.

Reply by Brenda_NC on 8/19/05 3:25pm
Msg #60420

Roger

Do you know what the Business activity code is that should be used for a notary public on the Schedule C? Thanks for your help in advance. I have searched the threads and could not find an answer. Thanks again.

Brenda

Reply by Roger/OH on 8/19/05 5:18pm
Msg #60449

Re: Roger

It's 541199

Reply by Brenda_NC on 8/19/05 8:14pm
Msg #60478

Re: Roger

Thanks Roger. I looked but didn't see in the list of numbers in the instructions on the Schedule C. Thanks againfor your help

Brenda