Tax Information

Do Loan Signing Agents have to differentiate between Jurats and Acknowledgments for tax purposes? Just asking because the SnapDocs platform make it where you can track these acts.

All notary-related income must be reported as business income, and you may have to pay income tax depending on your tax bracket. But the fees for the actual notarial acts such as administering an oath or taking an acknowledgement can be excluded from the income that is subject to social security tax. If your state has different maximum fees for administering an oath vs. taking an acknowledgement, then you would have to treat them differently when figuring out your taxes.

Perfect! Thank you!!

I keep track of how many notaries acts are in each signing I do because they are exempt from self employment tax!!

My primary practice is taxation, focusing on research, representation and litigation in complex tax matters. I practice before the IRS, state tax agencies and federal/state tax courts.

I covered the rules and citation on this message thread. The proper treatments, as well as the governing sections of Internal Revenue Code (IRC) are clearly indicated.

Jurats/oaths and acknowledgements are treated differently only if state law has a different limit for the two. This also applies if the state limits charge by the document, rather than the individual acts.

The notary needs to break out the following from each signing:

  • Total fee;
  • The number of notarial acts or documents, with the charge for each, comprising the official fee; and
  • The non-official component (i.e: the remaining balance) of the NSA fee.

I write the total number of notary acts in my journal, on the margin, next to the respective entry. In addition to being helpful at tax time, I use the number as an extra quality check before submitting the papers to the lender/closer.

My journal has a space for fee and travel (which I put as official and unofficial fees, respectively, calculated from the number of notary acts). If I only had one box for fees, I’d separate the two components with a “/”.

The following should also be recorded:

  • Direct transportation expenses (mileage, parking, mass transit, etc…) - include additional trips if needed for printing, pickup or dropoff
  • Other direct expenses (e.g.: FedEx Kinko’s, etc…)
  • Indirect expenses

Gross income is calculated by subtracting direct and indirect expenses from the total fee; the entire amount is included in taxable income.

Self employment taxes are owed on non-official income; that is, the gross income minus official fees (total fees - official fees - direct and indirect expenses).

Having that information recorded, on a per-assignment basis, also helps in figuring profitability (and which lenders/closing agents are worthwhile).

Hopefully this is helpful.

Please post other tax questions to this thread or section.

HWB.

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Thank you hbleiwas! This is very helpful as a new NSA. I recently started and checked out notary assist layout but felt like i can do it on my own since im pretty handy with creating excel spreadsheets and such. Now that i know what i need to plug in, i feel that i dont need to pay for a software to do it for me!

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Angelina -
Do you have an excel sheet like you could share?

Kudos to a TAX PROFESSIONAL for posting on this very important subject!