With tax season upon us have a question. If I receive a signing fee of $100 do I have to keep track of how many notarizations the signing has times the fee in my state? THe rest has to go to earning?
fourrr check out this thread:
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.
Question, if it’s one acknowledgment (one stamp) for two signers, is that considered 1 or 2 notarial act?
I would say it depends on what state law prescribes as a notary act for fee purposes.
Some states are per item/per signer, others consider unlimited signers per act. Check the law for each state in which you are credentialed.
If the state law is silent on the matter, I’d argue for one act per one signer.
Most of all, be consistent in reporting and substantiation.