If your state allows a charge per signature, as they do notarizations, then are they self employment tax exempt like a notarization? Chapter 12 of the IRS Pub17 does not mention signatures. Your thoughts?
It is my understanding in Virginia that notaries can charge $5.00 per notarial act, it does not mention per signature. I consider each signature a notarial act, therefore, the $5.00 fee per notarial act is tax exempt.
Yes…per signature would be exempt
I feel as though signatures should be as well, especially when there are electronic signatures allowed on some of the documents(mortgage type) but others need to be in front of the notary, such as the Right to Cancel… But does anyone have an accountant that has told them they are exempt?
Review the notary laws in your State. The IRS respects what state laws say regarding notary compensation. Then contact a local Tax Professional that’s familiar with the IRS Notary exemption and how it’s calculated. You don’t have to hire a Tax Professional, many will give you 30 minutes to have a chat. If you want formal advice pay the consulting fee. The fee is a business expense that you can take as a business expense.
In California per IRS: A notary public fees you receive for services you perform as a Notary Public are reported on schedule C. These payments are not subject to Self Employment tax.
The below comments is my understanding only; these statements are not to be misconstrued as tax or legal advice. I am not a CPA or Attorney.
I spoke with my tax guy who was unaware of this of the SE tax for notary publics in California. How ever I will pay regular income taxes on all of my income including my 15.00 per signature fee.
Example: in California a notary can charge 15.00 per signature. If I performed a loan signing which paid me 120.00 but I only notarized 4 signatures, I would pay SE tax on the 60.00 dollars remaining funds. Along with regular income tax.
Go to IRS.GOV and search your state tax regulations for a notary public. Not all CPA’s are aware of this expemtion.
It’s worth researching. I hope this helps.
The irony is most of my signings have enough notarial acts/signatures that if I charged per each one I’d earn more than the signing fee itself. A recent Equity Refinance had 22 Notarizations. At the Texas fee limit of $7.00 per each that works out to $154.00. I took the closing for $125.00.
I’ve experience this too on occasion.