I posted an answer to this question, in detail, in this thread on NotaryCafe’s forum.
Per Treasury Regs. 1.1402©-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 (included in AGI), although self-employment tax is assessed on only $68 of the income; the remaining $32 is exempt from self-employment tax.
Since there’s no set fee for safe deposit box opening (in NY), an argument may possibly be made that 100% of the fee is for the official act; I haven’t researched the issue extensively.
There are some specific procedures for appropriately completing the returns (i.e: filling out the tax forms), such as for the SE-exempt income, to avoid a return being questioned.
Hope this helps.
HWB.