Posted by Kathryn on 1/13/08 1:35pm
Msg #230418

Self employment tax exemption

My accountant has me pay self employment taxes. He said it raises a red flag with the IRS which could cause an audit. I don't make alot of money and I get back around $2700 each year in earned income credit so he doesn't think I need to do that.
Any views. Thanks.

Reply by Philip Johnson on 1/13/08 2:26pm
Msg #230424

Are you self employed?

If so paying self employment taxes are required. If you are saying he/she doesn't want you to use the Notary fees exemption part of the self employment taxes, it maybe time to find another accountant.

Reply by LisaWI on 1/13/08 2:41pm
Msg #230426

Re: Are you self employed?

Yes, Im a little unclear as to what your question is. For me my SE taxes are eliminated by my EIC credit. If I wasnt self employed I would get back quite a bit more, but the SE taxes have to be paid because of being self employed.
Example:
$4000 EIC Credit
$2000 SE Tax
$2000 Refund

Reply by Kathryn on 1/13/08 2:45pm
Msg #230427

Re: Are you self employed?

Yes, I am self employed full time. That is what happens, Lisa, with mine. I get some EIC back after he takes away SE Tax.
Thanks.

Reply by Glenn Strickler on 1/13/08 3:13pm
Msg #230431

I'm confused.

By your post, it sounds like you may not be sure what self employment taxes are.

Self employment taxes are nothing more than FICA (Social Security) taxes. Only as a person who is self-employed, you get to pay both the employee's portion and the employers portion. If you want to collect Social Security when you retire (if it's still there, but that's another post for the politics board) then you need to pay the self employment tax.

If you qualify for the EIC, this means that you are not paying any income tax at all and your EIC is paid from the taxes of those who do. So even after you are paying your self-employment tax, you should still have money left over from your EIC. That being said, there are deductions that you take as a matter of being self-employed that affect the amount of your self employment tax. By any computer models that I ran before posting this, if you are getting an EIC, your SET is not that high if your taxes are figured properly. Perhaps getting a second opinion on your taxes is in order. Every penny you can save is valuable. Maybe you know someone who will let you run your numbers in Turbo Tax or Tax Cut or one of the free programs such as Tax Act for yourself to check up on this.

JMHO ..

Reply by Glenn Strickler on 1/13/08 4:41pm
Msg #230432

Also, to clairfy

Income you get for notarizing a signature is not subject to SET.

Income you get for travel fees , additional loan signing fees etc. are subject to SET.

For example, here in California, we are allowed to charge a max of $10 per signature. So say I have a joint refinance and I am getting $150 for the job. There are two documents that need to have the signatures notarized. Each document has two signatures. So I have $40 that is not subject to SET, and $110 that is. If your accountant tells you anything else, get a second opinion.

Reply by Linda_H/FL on 1/13/08 5:37pm
Msg #230435

Re: That's what I was asking - from her post

I think that's what she was told...don't split the total fee into notary stamp fee and notary fee - just file the entire fee paid as income and pay the SE tax on the whole thing. Again, correct me if I'm wrong, Kathryn or anyone.

Reply by LKT/CA on 1/13/08 7:03pm
Msg #230438

Re: Also, to clairfy

<<<For example, here in California, we are allowed to charge a max of $10 per signature.>>>

Yes, each time the Notary signs and stamps, that's one notarization. But your next example is confusing.

<<<There are two documents that need to have the signatures notarized. Each document has two signatures. So I have $40 that is not subject to SET, and $110 that is.>>>

The Notary charges $10 for each notarization (in CA) not how many times the client signs. Where did you get the $40? What document would the Notary sign and stamp twice on the same page? If the client signs 10 times on the same page and I notarize it, that's one stamp and my signature one time to equal $10, not $100 for the 10 client signatures. Please clarify.

Reply by Dave_CA on 1/13/08 7:40pm
Msg #230439

Re: Also, to clarify

2 documents each with 2 signatures at $10.00 ea = $40.00 in my book.
We may charge $10.00 per signature notarized so I don't see the confusion.

Reply by LKT/CA on 1/13/08 7:44pm
Msg #230440

"I see" said the blind man

Ok, got it where Glenn said "joint refinance"....that's two people, 2 docs each, 4 notarizations equaling $40

Reply by Glenn Strickler on 1/13/08 10:37pm
Msg #230451

It was just an example

Most docs are $10 per signature in this state. We can't charge fees to military (I wouldn't if I could) and there are some other different limits. Of course, Kathryn will have to follow the fee structure of her state. The limit may be lower.

The bottom line is the fee charged for the notarization in not subject to self employment tax.

Reply by LKT/CA on 1/13/08 11:11pm
Msg #230453

Re: It was just an example

<<<<We can't charge fees to military (I wouldn't if I could) and there are some other different limits>>>>>

Pursuant to Gov't Code section 8203.6, no fees shall be collected by notaries public appointed to military and naval reservations in accordance with 8203.1;2

Pursuant to Gov't Code section 6017, no fee may be charged to a United States military veteran for notarization of an application or a claim for a pension, allotment, allowance, compensation, insurance or any other veteran's benefit.

If the veteran is not on a military base, and the paperwork is not the above, they can be charged. You said you wouldn't if you could and that's fine.

Reply by Glenn Strickler on 1/14/08 3:37am
Msg #230456

Yes, I know, but thank you for that, anyway ................

sigh .............

Reply by John_NorCal on 1/14/08 9:19am
Msg #230464

Correction Glenn re: Military Fees, just want to clarify

You state :**We can't charge fees to military**

According to the hand book:

3) pursuant to Government Code section
6107, no fee may be charged to a United States military veteran for notarization of an application
or a claim for a pension, allotment, allowance, compensation, insurance, or any other veteran’s benefit.

of course it's your choice whether or not you want to charge for notarizations outside of the scope of this section.

Reply by dickb/wi on 1/14/08 2:15pm
Msg #230527

either you or i are still confused......

i believe in ca it is $10 per signature notarized, not per document.....that means if 4 people sign one document that is a notarization fee of $40....in glenns scenario he had just 2 documents....there were 2 signatures on each document=$40.......is that the way you understood it.......or did you interpret it to mean each party had 2 documents to sign [one sig on each document]=$40......

Reply by Linda_H/FL on 1/13/08 2:59pm
Msg #230429

Re: So, correct me if I'm wrong

You're saying he feels you shouldn't split your notary income in order to avoid any red flags? I'm confused.

Reply by DebbieT on 1/13/08 8:09pm
Msg #230441

Re: In Florida

we are only allowed to charge 10.00 for up to three signatures on a document for acknowledgments. I there were three seperate certificates for the same document we could then charge 30.00.

Reply by Sylvia_FL on 1/13/08 10:02pm
Msg #230450

Re: In Florida

Where, in Fl notary laws does it specify "up to three signatures"???

Fl statutes are perfectly clear:

(2)(a) The fee of a notary public may not exceed $10 for any one notarial act, except as provided in s. 117.045.

No matter how many signatures are on a document if there is one certificate it is one notarial act.

s.117.045 is the fees relating to performing a marriage, and that is the only exception the allowed fees section mention.

Reply by DebbieT on 1/14/08 10:20am
Msg #230471

Re: In Florida

It says it in the 2006 florida notary law primer.

Reply by Linda_H/FL on 1/14/08 10:37am
Msg #230475

Re: In Florida...ah hah..

That would be a citation from the same authority who told me I can close loans in GA....

From the Governor's manual, page 9...

"Florida authorizes notaries to charge up to $10 for each notarial act — administering an
oath, taking an acknowledgment, attesting to a photocopy, verifying a VIN, or certifying the
contents of a safe-deposit box."

Reply by Kitty/VA on 1/14/08 10:23am
Msg #230472

Re: In Florida

Could someone please direct me to the section of the IRS codes that states the separation of notary fees for tax purposes. My accountant denies that this is allowed so any help would be greatly appreciated. tia

Reply by Philip Johnson on 1/14/08 10:30am
Msg #230473

http://www.irs.gov/pub/irs-pdf/i1040sse.pdf

Bottom of page SE3

Reply by Kitty/VA on 1/14/08 10:33am
Msg #230474

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

A great big thank you!

Reply by desktopfull on 1/14/08 10:56am
Msg #230480

I'd get a new accountant. Doesn't know IRS codes, Wow. n/m

Reply by Linda_H/FL on 1/14/08 11:21am
Msg #230484

Re: I remember last tax season and reading the forums

Apparently there are many, many accountants and tax preparers who never heard of the fact that our fees for the notarizations themselves are not subject to SE tax....scary

Reply by DebbieT on 1/14/08 10:46am
Msg #230477

Re: You are right Sylvia

The NNA has the wrong information in the book that they issue. Thank you for clarifying that.

Reply by DebbieT on 1/14/08 10:56am
Msg #230479

Re: That is pretty sad to

considering when I first started out a friend of mine who has been doing this for a few years told me the same thing. I can only imagine how many others think the same thing.

Reply by desktopfull on 1/14/08 11:00am
Msg #230481

What's sad is they purport themselves to being the "know it

all" in the notary world, when they constantly give out (sell in this case) misinformation.

Reply by Sylvia_FL on 1/14/08 11:57am
Msg #230488

Re: That is pretty sad to

" I can only imagine how many others think the same thing"

Every Florida notary should be familiar with the Florida Statutes pertaining to notaries, regardless of what other entities say. The fees are clearly laid out in the statutes.

Also on the application to become a notary it states,as I have pasted below, that the applicant has read Chapter 17 of the Florida Statutes and know the duties, limitations etc of a notary.

I DO solemnly (swear) (affirm) that I will support, protect and defend the Constitution and Government of the United States and of the State of Florida;
that I am duly qualified to hold office under the Constitution of the State of Florida; that I have read Chapter 117, Florida Statutes, and any amendments
thereto, and know the duties, responsibilities, limitations, and powers of a notary public; and that I will honestly, diligently, and faithfully discharge the
duties of Notary Public, State of Florida on which I am now about to enter, (so help me God).
UNDER PENALTY OF PERJURY, I DECLARE THAT I HAVE READ THE FOREGOING APPLICATION AND OATH AND THAT THE FACTS STATES THEREIN ARE TRUE. I accept the office of Notary Public, State of Florida.

Reply by Sylvia_FL on 1/14/08 11:22am
Msg #230485

Re: You are right Sylvia

Debbie
I taught notary classes that prospective notaries take to be able to obtain their commission. I feel I know the notary laws for the state of Florida backwards and forwards <g>


It does not surprise me to know that the misinformation you received came from the NNA.
I haven't seen their Florida notary law primer but I know at one time it was stating that notary fees in Florida were $10 per signature. When it was pointed out to them that they were wrong, they still insisted they were right. When the Florida SOS clarified it, their response was that they did not agree with the Florida SOS!
The arrogance of them! They leave Florida notaries open to complaints and possibilities of losing their commission for charging more than the allowable fees.

Reply by DebbieT on 1/14/08 12:19pm
Msg #230502

Re: You are right Sylvia

On the SOS site in the Goveners Referance Manual on page 3 they are advertising the NNA. Crazy.

Reply by Sylvia_FL on 1/14/08 1:00pm
Msg #230507

Re: You are right Sylvia

Yes, they have the NNA in the list of internet sites to check out. However they are not recommending them or any of the others.

If one needs a "Florida Primer" other than the Governors Reference Manual, then I would recommend the American Society of Notaries "Florida Handbook"

Reply by DebbieT on 1/14/08 1:16pm
Msg #230511

Re: You are right Sylvia

I just don't understand how they can get away with providing false information.

Reply by Sylvia_FL on 1/14/08 2:16pm
Msg #230528

Re: You are right Sylvia

Because no one calls them on it!

But it is up to the notary to familiarize themselves with the FL statutes and the fees they can charge, they should never take someone elses word for it (No, not even mine, they should do the research and know the laws themselves)