Updated 1-11-24 with information for the 2023 tax year.
April is just around the corner, which means it's time for Notaries to get their income tax returns ready for the 2023 tax year. There are five tips Notaries should consider when preparing to file income tax, according to David M. Green, who is a Notary, Enrolled Agent, National Tax Practice Institute Fellow and owner of David M. Green Bookkeeping and Tax Service in Waynesboro, Pennsylvania.
These are general guidelines only, and every person’s tax situation can differ. If you have specific questions about your income tax situation, contact the IRS or a qualified tax advisor.
1. Reporting Notarization Fees
According to IRS Publication 17, all fees received specifically for notarial acts should be included in gross income — the amount of money received before anything is deducted — on a Schedule C or Schedule C-EZ (Form 1040). Notarization fees are not subject to self-employment tax, but be sure to check with a qualified tax professional or the IRS if you have questions or if there are other factors that could affect how you report your income.
2. Notaries Paying Self-Employment Tax
Mobile Notaries must carefully itemize notarial versus non-notarial fees from loan signing assignments. If you are a self-employed Notary Signing Agent, IRS Publication 17 states that you must pay self-employment tax if you had net earnings of $400 or more from fees for services other than notarizing documents (for example, traveling to a signer’s home, delivering completed loan document packages, etc.). Any income falling into this category must be declared on an IRS Form 1040, Schedule SE for self-employment tax purposes.
3. 1099-NEC
If you’re working as an independent contractor for different companies and lenders, you can expect to receive a 1099-NEC (Non Employee Compensation) from any company that paid you $600 or more to perform loan document signing assignments. If a company paid you less than $600 for loan signing assignments during the year, it is not required to send you a 1099-NEC (though some may still send you the form) — but you still may be required to report that income on your taxes, so keep careful records of all earnings throughout the year.
4. Keeping Accurate Records
Keep careful track of all your tax-related information. For example, if you intend to deduct your mileage for mobile Notary assignments, you should keep a detailed mileage log showing the date and how many miles you traveled for each assignment, either on paper or electronically. There are a few good apps such as MileIQ, Milebug and MileTracker for smartphones that keep track of mileage on a daily basis. If you plan to deduct subscription costs for an online Notary directory to market your business such as FindaNotary.com, be sure to keep any receipts and records of your subscription payments.
5. Home Office Deductions
The home office deduction allows you to claim as business expenses a portion of both deductible expenses, such as mortgage interest and real estate taxes, and otherwise nondeductible personal expenses including utilities, home insurance, repairs and depreciation. However, you must keep all statements and receipts to substantiate these claims. Be careful when claiming a deduction for using part of your home as an office. Home office deductions have very strict requirements, though there is a simplified home office deduction option also available. As a general rule, the IRS regulations for home office deductions require that the space is used exclusively and regularly as your principal place of business or as a meeting place for clients and customers in order to be claimed as an income tax deduction.
2023 Year Tax Deadline Reminder
For this upcoming tax season, the deadline for individual tax returns the deadline for individual tax returns for everybody in the United States is Monday, April 15th, 2024.
David Thun is the Editorial Manager at the National Notary Association.
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