As a signing agent the jobs are fixed fee. I want to claim the maximum allowed cost ($15/signature in CA) as part of the NOTARY EXEMPT allowance on my federal return.
Example: JOB FEE $100
NOTARIZED SIGNATURES: 6
EXEMPT FROM FEDERAL SELF EMPLOYMENT TAX: $90.00 (6 X $15
SELF EMPLOYMENT TAX DUE ON $10 - DEDUCTIONS (MILEAGE, ETC.)
ONE WOULD STILL OWE FED INCOME TAX ON $100 - DEDUCTIONS (MILEAGE, ETC).
Anyone ever ran this buy their accountant.
Not sure what the question is here - that’s the way it is - it’s the IRS regulation. In your example you’d owe SE taxes on $10 and federal income tax on the full $100
Linda’s right. However, because it is such a small ‘special niche’, many accountants aren’t familiar with it (if that was your question). One caveat about the deductions–further down the road you may regret taking those deductions as it will impact your social security benefit. Just something to consider…
I read an article within this notary blog about line 58 making notary fees exempt. I’m in WA State and ran this by my CPA. He dug out his trusty huge IRS information book and showed me where it states if services and fees are collected while performing services as an agent for the state or federal government these fees shall be exempt. Check it out with your tax person.
Yes I’m aware of that, what I was curious about was if you have a fixed price signing, can you claim that a certain part i.e. notary fees (exempt from SE tax) could be also claimed: I think they can I just don’t want to act on it until I have a better feel if its ok. In California, Notaries are considered public servants.
Yes you can - just keep good records of how many notarizations per job you had…
I’m old-school - I kept a notebook (yes they still make those…lol) - columns - date, payor & job name, total fee collected, total for notarizations (at $10 per in my state) and the balance of the fee in the final column - then I knew at year end exactly how much of the fees I collected were notary fees and were exempt.
What you can’t do is carryover deductible fees to another signing. Example, CA fee is $15/ & you did a job with 10 N @ $15 or $150/deduction, but fee was just $100/all deductible… Then next one was $100, but just 2 N or $30/deductible. You can NOT take the $50 ‘left over’ from the first and apply it to the second. Hope that made sense.
Thank you, that was my next question
In CA you also have state tax. WA no state tax.
I’ve been using the the amount for notary exempt income as the minimum of #signatures x fee or income minus DEDUCTIONS which will include paper & mileage on a PER JOB BASIS (i.e. it doesn’t carry over from one job to the next). However I also have deductions for phone/printer/computer/software costs spread out over 5 years. This has been applied over the total earnings to readjust the SE tax, but this seems wrong since it should be on a per job basis. Any thoughts? I don’t have an accountant nor is it worth having one for this one issue.