Posted by pat/WA on 4/14/13 4:27pm
Msg #465650

Self Employment tax

Washington State Legislature
WAC 308-30-020
What fees may a Notary Public Charge?
(1) the maximum fees a notary may charge for notarial acts are $10.00
(2) A notary public need not charge for notarial acts
(3) A notary may charge actual costs of copying any instrument or record
(4) A notary may charge a travel fee when traveling to perform a notarial act

IRS
The fees generated by your services as a notary are exempt from self-employment tax.

Reply by John E. Rogers on 4/14/13 5:10pm
Msg #465655

Your last line under IRS...can you cite reference for this? Hard to find specific references in IRS material related to notarizations. jer/oh

Reply by pat/WA on 4/14/13 6:52pm
Msg #465666

http://www.irs.gov/instructions/i1040sse/ar02.html#d0e411
Income and Loses not included in net earnings from self-employment. Number 2

Reply by Doris_CO on 4/14/13 7:42pm
Msg #465673

Pat/WA, if your interpretation of this law is that ALL of your income from an assignment as a Notary Loan Signing Agent is tax exempt, you are wrong. Which is why you received the letter from IRS stating you owed Self-Employment taxes. (Msg #465555). See http://www.irs.gov/pub/irs-pdf/i1040sse.pdf, page SE-5, #2, under Income and Losses Not Included in Net Earnings From Self-Employment.
Every year there is at least one conversation about Self-Employment taxes. It really doesn't matter what your interpretation of the law is. THE BOTTOM LINE IS HOW IRS INTERPRETS THE LAW and if you get a letter from them telling you that you owe taxes, you must deal with it.

Reply by John E. Rogers on 4/15/13 10:23am
Msg #465728

Once again, this topic has provided some food for thought; thanks to all who contributed! jer/oh

Reply by Shoshana/AZ on 4/14/13 8:04pm
Msg #465674

I agree with everybody else.

The notary fee is the amount you get per ack or jurat. The rest of the money for the signing can be attributed to mileage, courier services, etc. Don't fight with the IRS.

Reply by BrendaTx on 4/14/13 8:39pm
Msg #465680

I see her point.

But, I think that the IRS might see it as if she is double dipping. The WA law says she can charge for her travel fees. However, if she is taking the mileage deduction, that already reduces her notary income by the amount that would be the travel fees.

Reply by sueharke on 4/15/13 12:03pm
Msg #465748

Re: I see her point.

I would ask if charging for travel fees is income? If it is income, then taking the mileage deduction offsets the travel fee income as an expense. This is called "showing it broadly" by separately stating the income and related expense on the tax return.

Reply by BrendaTx on 4/14/13 8:36pm
Msg #465678

That is very interesting, Pat.

It says that you MAY charge fees for traveling. But, what about your mileage deductions? If you took mileage deductions, that means you have already had that part of you allowable fees deducted from your reported notary fee income.

And, you may not be able to include your signing agent fees...so, between taking the mileage deduction and not separating out what is left and claiming it as signing agent fees rather than notary fees....that might be what has you pickled.

Reply by Marian_in_CA on 4/14/13 9:42pm
Msg #465684

I guess one way to look at it is the way they do in California. In CA, our laws say that we can only use the title of Notary Public for providing notarial service. (Ca Gov't Code 8207) -- "Notarial service" means the notarial act itself up to the maximum fees allowed by law per act.

We are allowed to provide additional services, but it is NOT considered a notarial act or notarial service.

So for us, the distinction is very clear. Income earned as a NOTARY for NOTARY SERVICE only applies to the notarial act itself, not any additional or ancillary services.

That's why you got the letter from the IRS. The IRS knows full well that many notaries who are self-employed provide additional services or charge extra fees for things such as travel, printing, courier work, etc.

I have a good friend who is an accountant and he said the best way to look at it is this:

The only income that you can claim as exempt from the SE tax as a notary (if you choose to do it) are the fees that are regulated by law by your state.

Reply by Larry/IL on 4/15/13 9:54am
Msg #465717

That might work for your state return. I doubt that it'll work for a federal return.

Reply by sueharke on 4/15/13 12:06pm
Msg #465751

Marian, your accountant said it simply and correctly. The other aspect is that the only exempt income for IRS purposes is income specifically exempt by law... hence notarization fees are exempt for SE income.