Perhaps I can help.
I am an Enrolled Agent (a credential granted by the US Treasury/IRS), admitted to practice before the IRS, states' tax agencies and a number of state tax courts/tribunals. My firm specializes in research, representation and complex returns, Additionally, a number of our accountants are Notary Signing Agents (NSA .
Do you have any specific questions? If so, please post so our peers can benefit from the discussion.
The basics of a NSA return are relatively standard, only varying based on how the taxpayer is organized (individual or entity) and other specific elements of the fact pattern.
Whether signings are a primary or 'after-hours' job, informational returns (W-2's, 1099's, etc..) for all income sources should be gathered. Payments not reported on 1099 (e.g.: <$600 from a payer) should be tallied.
Per Treasury Regs. 1.1402(c)-2(b)(2), only statutory notary fees are exempt from self-employment tax.
For example, a signing package for H&W contains 5 acknowledged documents and 3 sworn affadavits executed by each (8 notary acts per signer x 2 signer = 16 notary acts). NY Executive Law 136(2) prescribes a statutory fee of $2 per notary act, per signer, totaling $32 (16 x $2). The signing agency or closing agent pays $100. The entire $100 is taxable as ordinary income, although self-employment tax is assessed on only $68 of the income; the remaining $32 is exempt from self-employment tax.
There are specific procedures for appropriately completing the returns, such as for the SE-exempt income.
Obviously, you need to capture expenses - mileage/parking/tolls, paper, ink, office supplies, insurance, membership, certification, training are just a few.
I recommend reconciling against one's notary journal to make sure nothing is missed, either for income or expense. To ease SE-tax reconciliation, it's a good practice to record the exact number of notary acts in the journal next to the entry for each signing.
Depending upon business organization (S/P, C-Corp, S-Corp, etc.), certain tax treatments may, or may not, be allowable. Income and expenses would be reflected on Schedule C, 1120, 1120S and/or other forms appropriate to the entity.
Obviously, taxation is substantially dependent on fact pattern, and is a much more exhaustive topic than can be adequately covered in a single post.
Finally, if you let me know where in CA you are, I can talk to some colleagues to refer you.
Howard W. Bleiwas, EA, CAA
Richards, Allison & Company, Inc.