Posted by SamIam_CA on 6/13/05 6:44pm
Msg #44404

Basic bookkeeping question

After reading many posts about self employment tax etc. I realize that I have to keep track of the money I get for the individual notarizations - not just the total paid for the entire package.

For example borrower Jane Smith's loan required 8 documents notarized. In CA that is worth $10 each doc. I was paid $125 for the loan so I separated my payment into $80 for notary fees and $45 for signing agent fees.

What do y'all do when your notary fees are upside-down? For example borrower Joe Blow's loan required 8 documents notarized. In CA that is worth $10 each doc. I was paid $75 for the loan.

Can/Should I separate my payment into $80 for notary fees and a discount of $5 for signing agent fees? If not, how do you handle similar situations?

Reply by BarbaraL_CA on 6/13/05 6:57pm
Msg #44405

In you example of $80 notary fees and paid $75, I put $80 for notary fees and $0 for signing fee. I also have read else where that the IRS considers a "signing fee" as a set fee for services and you can not deduct the notary fees from SE tax in that case. I disagree with that because the way I look at it, a notarization is a notarization - period! So I should be able to charge $10 per notarized signature.

Any one else?

Reply by BrendaTX on 6/13/05 7:06pm
Msg #44408

I am with you Barbara; let's see what Jon says.

Reply by stamper_WI on 6/13/05 7:18pm
Msg #44409

I don't charge for notary fee..it's so nominal in WI! And I point that out in my marketing! Last time I checked it was something like 50 cents. "Public Service" is Public Service

Reply by Jon on 6/14/05 12:04am
Msg #44474

I say.....Brenda, didn't you go to tax school last year????

Reply by BrendaTX on 6/14/05 8:10am
Msg #44502

Yes, but there is a whole lot of difference between taking a tax course and KNOWING what the heck I am doing and screwing with people's taxes/lives.


Hmmm...I am willing to admit this about myself, but what thinking you're a ready and able NSA after after taking a loan signing class....Could it be that loan signing courses don't necessarily mean you know what you are doing either???


=============
Let me digress - stop here Hugh....This reminds me of my 2nd cousin - Professor S.

Prof. S is the SMARTEST man in the world.

When my aunt got sick/unable to remember to take care of herself in certain areas of her life, Prof S and I got into a family discussion about his and his mother's ALLEGED problem of using his grandma's credit card to the tune of $24,000+. (I saw notes in my aunt's own handwriting as possible evidence of the same.)

I told him some things that he needed to do to keep me/ the county judges out of his business on that little problem...that is, take good care of his grandmother - and not put it on my own mom. If he would do that his grandmother/my aunt would not need a guardian.

My involvement was only to keep my own mother from killing herself with handling a Alz's type illness and cancer treatments for my aunt. I was willing to become a guardian if necessary, but this would not become my mother's problem under my watch!

He read the law and lied/babbled at me he had seen a lawyer and I could not do this.

Ha ha...dumb ol' me...I am but a former lowly secretary for a probate lawyer...I have had hands on experience and know how the law works for guardianships in Texas by seeing some of the Texas Bar Association's finest at work. I also consulted a lawyer during this time on behalf of my aunt.

Prof. S. read the section on Guardianships...but not on Temporary Guardianships. I had lived Temp. Guardianships in a former life...I knew any interested party could become one...even county welfare. Finally got him to listen. His grandma/my aunt is now getting some attention and my own mother is able to go have a little golden age fun. Darn her - spending my inheritance in Branson, MO with her boyfriend, no less!

It was kind of like giving the SMART Prof. S. a firm wake up wedgie.

Reply by Alex_NY on 6/13/05 8:19pm
Msg #44420

It is not about what you deduct. According to the tax law, whatever is shown on your 1099Misc forms (which you're going to receive in January 2006)this amounts you will include in your business income on Schedule C and if you do not, the IRS will correct it , since they receive a copy of your 1099's from employers.

Reply by BrendaTx on 6/13/05 8:21pm
Msg #44422

***It is not about what you deduct. According to the tax law, whatever is shown on your 1099Misc forms (which you're going to receive in January 2006)this amounts you will include in your business income on Schedule C and if you do not, the IRS will correct it , since they receive a copy of your 1099's from employers.***

You report all your income. Read Pub 17 to understand about the income of a notary public in reporting it to the IRS. See Self-employment Tax.

Reply by stamper_WI on 6/13/05 8:21pm
Msg #44423

No 1099 if you have done less than $600 worth of biz with a given company.

Reply by Barry on 6/13/05 8:36pm
Msg #44430

This seems like a CPA or tax attorney question to me.

Reply by Judith_VA on 6/13/05 8:39pm
Msg #44433

Not sure what the issue is here. Income is income. Is there an IRS regulation that states notary fees are not subject to self employment tax? If so, where in the regulations is that stated?

Reply by BrendaTX on 6/13/05 8:43pm
Msg #44436

http://www.irs.gov/publications/p533/ar02.html#d0e912

Reply by Reggie on 6/13/05 9:39pm
Msg #44452

Notary fees are not taxable according to the IRS but you have to include it in your schedule C not your Self-Employment tax. This is according to the Tax Manuel and discussing it with a CPA.

Reggie
Kansas

Reply by BrendaTX on 6/14/05 7:43am
Msg #44498

Notary Fees: Taxable Income vs Taxable for Self-Emp Tax:

Reggie, I am not an accountant, not trying to give advice-- here's where bookkeeping confusion lies regarding our jobs...I understand this from Pub 17 / IRS.gov and from taking the HR Block course. I passed this course...did I fail to understand something???

Here's what I *think* is true:

Notary fees are income & they are taxable as income.

However,

Notary fees are not subject to 15% Self-Employment tax.

===============
Disclaimer: I may not know what the heck I am talking about--ever...YOU MUST CONSULT THE IRS OR AN ACCOUNTANT, LAWYER, OR OTHER RELIABLE SOURCE FOR YOUR BUSINESS DECISIONS

Reply by Lori/CA on 6/13/05 8:39pm
Msg #44432

SamIam,

I have information I received that supports the responses to this post.

Bookkeeping for me: I split what is notary and what is signing. If I am paid $150 and I did $160 in notary work than all $150 goes to notary the other $10 you just say oh well.....

According to IRS this past year they informed me if I get a lump fee I am a signing agent and nothing is exempt from SE tax. I know their hand book states you do not pay SE Tax on notary work and this is how I choose to do my accounting.

I did go to a CPA this year and when he completes a return for a signing agent he does not use the notary income when figuring SE Tax due to the IRS hand out on Notaries and SE Tax.


The choice is up to you! Hope I did not confuse you.

Lori

Reply by Judith_VA on 6/13/05 8:43pm
Msg #44435

Lori, thanks for the detail. Please be more specific...what is the handbook or handout to which you refer in your post? I'm guessing one can obtain the same info at www.irs.gov? Thanks.

Reply by Alex_NY on 6/13/05 8:48pm
Msg #44438

IRS Pub.17

This is from IRS Pub.17
Notary public. Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). These payments are not subject to self-employment tax. (See the separate instructions for Schedule SE (Form 1040) for details.)

Reply by Stephanie_CA on 6/14/05 2:38pm
Msg #44598

Re: IRS Pub.17...Alex is correct here. n/m

Reply by JanetK/CA on 6/14/05 2:04am
Msg #44487

For Joe Blow's loan, you could divide the $75 by 8 for the 8 notarizations, equaling $9.375/signature, just recording the total amount paid (i.e. $75). I don't believe you can record a negative number ($5.00) under signing agent fees to subtract against other appointments where you might have a higher fee, but fewer notarizations.

This is an issue where there seems to be lots of opinions and little consensus.

Reply by SamIam_CA on 6/14/05 12:42pm
Msg #44545

Re: Basic bookkeeping question - phew!

Thanks to everyone for your input. Seems that just like everything else in NSA-land...there are no black and white answers. I will definitely brush up on reading about schedule c and publication 17. It looks like this might be the year to pay someone to do our taxes.