Posted by Barbara O on 12/13/05 12:42pm
Msg #82201

Taxes and signing agents

I am trying to be sure and be prepared for tax season. I just attended a seminar for notaries held by the NNA. There they stated that notaries do not have to pay taxes for teh money they receive for their notary services. Does anyone know how this translates into signing agent fees? Thanks in advance

Reply by ColleenCA on 12/13/05 12:46pm
Msg #82205

You do not have to pay self employment taxes on regular notorial services, but you do have to pay income tax on both regular and signing agent services. You have to pay self employment taxes on signing agent services as well. If you are in California, that translates to only paying income taxes on the 10.00 signature fee, but all taxes on all other services. I hope I said that right.

Reply by Beth/MD on 12/13/05 12:47pm
Msg #82207

Colleen beat me to it.

Reply by Beth/MD on 12/13/05 12:46pm
Msg #82206

It might be that you're referring to notary fees are deductible from self employment tax.

Reply by Brian_MA on 12/13/05 12:48pm
Msg #82209

Hi Barbara,

Well, we had this discussion a little earlier. I actually posted the question, but apparently, the question didnt quite pass the muster of some guy named PE who reemed me.

Well, anyway, you do have to report fees. its income. we said that a company doesnt have to report a 1099 to you if you didnt earn over $600, but you still have to report it on your returns. whether you do or not is a decision you have to make on your own.

Reply by sue_pa on 12/13/05 12:59pm
Msg #82215

Brian, general advice. don't discount good info just because you don't like the delivery.

Reply by Anonymous on 12/13/05 2:12pm
Msg #82241

Sue I wonder what makes you reply
with this.
what use is it?

Reply by Art_MD on 12/13/05 1:27pm
Msg #82223

The definitive answers are in the IRS publications.

In short.....

All income is subject to federal income tax.
On income on which Social secuity taxes are not with held (here we are refering to self employed income) you must pay self employment (SE) taxes. There is an exemption for notary fees from SE taxes. The amount that is exempt depends on the state.
i.e.

California - $10 per notary act is the maximum allowed. So, if you do a signing for $75 and there are 5 notary acts, then $50 is not subject to SE tax, $75 is subject to federal tax and $25 is subject to SE tax.

Maryland - $2 per notary act is the maximum allowed. So, if you do a signing for $75 and there are 5 notary acts, then $10 is not subject to SE tax, $75 is subject to federal tax and $65 is subject to SE tax.

So, comparing CA and MD, for the same fee, I pay approx $10 is SE tax, in CA it would be approx $4.50 in SE tax.

Each state is different. this is my interpretation not legal or tax advice.

Please read the numerous posts - search on self employment tax, SE tax, etc.

Art

Reply by NM_CO on 12/13/05 3:11pm
Msg #82254

Get a CPA. It's well worth every cent. If all you're claiming on taxes is this business and not houses, stocks, ira's etc it won't cost that much to get a CPA. I tried to do my taxes one year and all I got were a bunch of letters from the IRS saying I owe this and that and this and that and then I was charged "late fees" etc etc etc. Just not worth it to do yourself unless you are a tax pro.

Reply by Genkichan on 12/13/05 5:37pm
Msg #82278

Ha! The NNA as a source of tax information. Now there's good one for you. Based on the way you phrased your question, better review everything else they told you with a tax professional, too. Others have already given you the correct answer to this one in particular.