Posted by Kathryn on 1/15/08 9:20am
Msg #230651

Help. Still on Notary self employment exemption

I tried to tell my accountant about the exemption information and showed him a xeroxed copy but he said there is no where on the tax forms to list that (the part that is exempt) and that it would draw a red flag plus, I should be saving for soc. security.

Okay. What do you all say to that? How is it listed on your tax forms?

Thanks. Misti

Reply by Deborah Hicks on 1/15/08 9:21am
Msg #230654

I used turbo tax with IRS Code 541100 and it ask how much of income is from notary services.

Reply by Lisa Prestegard on 1/15/08 9:32am
Msg #230658

BIG red flag...

and it isn't the IRS kind of red flag. It's the "time to find a new account" kind of red flag.
Seriously. An incompetent CPA can cause you years of misery.
Not all CPA's are bright, or well-informed. This one seems to fall into that category.
He's been given two chances (one with documentation) and STILL wants to argue the point?

IMHO, I'd have to say "Buh-bye!"

Reply by CF on 1/15/08 9:37am
Msg #230659

Re: BIG red flag...

Kind of like NSA's some are good and some are bad!!!!!!!

Reply by Burton Georgia Loan Closers.com on 1/15/08 9:48am
Msg #230661

CPAS VERSUS TAX ATTORNEYS

Generalizations are like stereotypes, and I try to keep these thoughts in mind when commenting about others.

EVERY profession or trade has a wide range of skills in members. Some CPAs are very, very talented and the opposite is also true. Same for lawyers. Same for notaries. Same for title companies. Et cetera.

If you think you may be audited by the IRS, you are better off hiring a tax lawyer so you will enjoy attorney-client privilege for your comments.

Likewise, you can have your CPA hired through a tax lawyer so your information and conversations will be privileged. There is no CPA-client privilege that I know of, so be careful about what you communicate to your CPA!

Burton F.

Reply by jba/fl on 1/15/08 9:48am
Msg #230662

Re: BIG red flag...

Lisa: "IMHO, I'd have to say "Buh-bye!"

followed with Big Barbie wave too! LOL!!

Reply by Susan Fischer on 1/15/08 9:44am
Msg #230660

See:

http://www.irs.gov/publications/p334/ch10.html

It's not a red flag, it's IRS Code. And, in the event of an audit, you have your journal to back up your reporting.

You can still pay the tax into your SS account if you wish. I under-report my notarial income and pay into my SS account.

Reply by Doris_CO on 1/15/08 10:01am
Msg #230666

Re: Also See:http://www.irs.gov/pub/irs-pdf/i1040sse.pdf

Under the section titled "Income and Losses Not Included in Net Earnings From Self-Employment", #2. This gives the preparer instructions on what can be taken and how it's recorded on the SE form. My husband and I used a CPA last year because of a complicated tax return and the CPA wasn't familiar with the Notary exemption and he's the owner of the company and been in business for over 30 years. If the preparer has never done a tax return for a Notary Public they wouldn't have any reason to know about the exemption.

Reply by Miranda/VA on 1/15/08 10:23am
Msg #230669

Re: Also See:http://www.irs.gov/pub/irs-pdf/i1040sse.pdf

I use Turbo tax with that id number and it does not ask me about notary fee when/where should it ask me. Also if you dont get a 1099 where do you put your income.

Reply by PA_Notary_II on 1/15/08 10:00am
Msg #230664

On my 2006 schedule SE, my accountant listed my net profit on line 2 then on line 3, he listed, in parenthesis, "Exempt Notary" on the dotted line, then the net difference at the end of line 3. Line four is the net, SE taxable earnings after subtracting line 3 from line 2. Hope this helps.

Reply by LisaWI on 1/15/08 10:33am
Msg #230673

Re: I have a question

What is your accountant having you put for your profession where it asks? If it is just notary, then I can see this raising a flag for the IRS, if it is Mobile Notary, then it should not. Does your accountant understand what you do for a living, and that you are not just a notary who works for an employer. That you make a living out of being a Mobile Notary.

Reply by Glenn Strickler on 1/15/08 11:06am
Msg #230677

WOW ---- Kathryn

You need to get a second opinion. You are getting answers here from notaries who have been in business for years and know what they are talking about.

I have just been in this for 4 years after I retired and use Tax Cut to do my taxes. It asks the question. I don't know what line number, code or anything else. The program asks if any of the income is notary and I answer yes, tell it how much and it fills in the amount and reduces my SET. Since most tax accounts use software also, I don't see what his problem is.

There is a bigger picture here, however. If he is telling you that you should be paying SS tax so you have retirement money when you retire, then he has a problem. He should be telling you to open an IRA and what ever SET that you don't pay by being a notary into the IRA. You will have far more money when you do retire. Can't afford it? Well, If you think you can't afford it, then email me and I can tell you my sad story of divorce and debt, but the bottom line was I retired from full time at age 54. I will collect SS when I get to 62, but I am living off the few dollars per week I put away (and it was just a few dollars).

Your situation has so many warning bells and lights going off in my head, I can't hear anything else right now ... please get some other advice. It sounds like even one of those mass market tax service would be better (like Block).

Reply by Glenn Strickler on 1/15/08 11:07am
Msg #230678

Forgot to check the link box .... n/m

Reply by WDMD on 1/15/08 12:06pm
Msg #230685

Re: WOW ---- Kathryn

"The program asks if any of the income is notary and I answer yes, tell it how much and it fills in the amount and reduces my SET. Since most tax accounts use software also, I don't see what his problem is. "

The majority of tax programs that professionals use do not ask questions. The majority are form based (for data entry purposes) and it is up to the preparer to know what information should appear on a particular form.

Reply by sue_pa on 1/15/08 11:08am
Msg #230680

...plus, I should be saving for soc. security...

as the person preparing your tax returns, that's none of his business. If he's your 'financial advisor' that's a different story. I believe most self-employed people (although I'd bet not many 'signing agents') take that money and invest it themselves, rather than donate it to social security and hope it's there for them.

Reply by JanetK_CA on 1/15/08 8:20pm
Msg #230794

"...donate it to social security and hope it's there for them."

Well put!!! ;>

Reply by desktopfull on 1/15/08 12:09pm
Msg #230687

Do yourself a favor, go buy Turbotax and do your own taxes,

even Turbotax has a page that comes up in the interview that asks if the income is notary exempt on the SE Taxform, and next year you can deduct the cost of the Turbotax. You appear to have more knowledge than this accountant. Why whould you pay this person and do the job for them? They really needs to get out of the tax business and go back to just keeping books somewhere. They're totally incompetent.

Reply by ME/NJ on 1/15/08 12:19pm
Msg #230693

Hire a accounting firm and lawyer

Been doing this for years and the IRS is cracking down on small business, I have been audited 2 out of the last 7 years and the yearly cost of an accountant and lawyer are worth it in the long run. Now if I only made 10-20K doing this then yes I would do turbo tax. ( be conservative on deductions)

First time I was audit it cost me $$$$$ after that the pros took over.

Reply by Rachel/ORWA on 1/15/08 12:46pm
Msg #230695

Re: Hire a accounting firm and lawyer

"be conservative on deductions"

I do the opposite: I am aggressive on deductions. If I am able to reasonably justify them, and have records to back them up, I take 'em.

JMO

Reply by Rachel/ORWA on 1/15/08 12:48pm
Msg #230696

Re: Hire a accounting firm and lawyer

"be conservative on deductions"

I do the opposite: I am aggressive on deductions. If I am able to reasonably justify them, and have records to back them up, I take 'em.

JMO

Reply by SReis on 1/15/08 1:41pm
Msg #230705

Does anyone use H&R Block?? n/m

Reply by Rachel/ORWA on 1/15/08 3:57pm
Msg #230725

Sorry for double post; didn't think either went through, and

gave up and went away from my computer. Now I see both posted. Oops.

Reply by Dennis D Broadbooks on 1/15/08 5:05pm
Msg #230743

This Year...

...unless something changes my plan is to use the online version of TurboTax to file. I utilized the services of a CPA for the past 6 years & received a letter last week stating the firm was "going in a different direction". Prior to 2000 I used the PC version of TurboTax as I also use Quicken Premier H&B. I stumbled upon the TurboTax online version several days ago & I'm already 99% done. TurboTax online charges $93.65 for both the federal & state returns & you don't pay until you actually file. Beats the $420.00 I paid the CPA for last year's return.

Reply by Dennis D Broadbooks on 1/15/08 5:20pm
Msg #230749

BTW...

...related to the SE Tax Notary exemption, TurboTax online has the capability of accounting for this under the "Business Tax" section of their software. When you get to the "Self Employment Tax" screen there's a box called "Income Adjustments" & by clicking on it you are taken to a screen which allows you to report your "net income earned as a Notary Public".

Reply by SharonMN on 1/15/08 2:57pm
Msg #230717

It's just not that hard. I do my own taxes at my kitchen table with a pencil and a calculator. I read the instructions the IRS sends with my tax forms and do what they say. For the notary exemption, I look at the instructions for Schedule SE and it says exactly what to do.

I find it annoying that certain accounting/tax professionals can't seem to follow the instructions which were designed for the general public to use.

Reply by dickb/wi on 1/15/08 3:50pm
Msg #230723

you tell him to put it on your 1040 as other income [notary] n/m