Notary Income Self Employment Tax
It’s that time of year again; that infamous April 15th deadline looming. However, it’s important to understand that your taxes as a self-employed notary don’t have to be scary or overly complicated. While some notaries work for an employer, the majority of us choose to have our own business. Being a self-employed notary means there are strategies you can take to minimize your tax obligation.
Hopefully, you’ve implemented some solid methods for keeping track of deductions. And if you haven’t, 2020 is your year to start! Whether you’ve got a rock solid system in place for recording your expenses or you’re flying by the seat of your pants (not recommended), below are some simple guidelines to ease your tax pain.
Supplies & office expenses
The initial cost of buying notary supplies might seem like quite an expense. And, well, it is! From your stamp, journal, office machine, ink, paper, and on and on…it’s a lot of items you need to purchase.
But with purchases, come deductions! Absolutely anything you use for your notary business is an expense and therefore a deduction. Considering treating yourself to that beautiful leather briefcase, satchel, or portfolio? If you do, it’s a deduction! Bigger ticket items like your computer and even office furniture can be written off and depreciated over time. Do you have a home office? If so, a portion of this (depending on your setup) can also be deducted.
Often, the largest expense in running your mobile notary business is travel and everything that goes along with it. The most important component in maximizing these deductions is good record keeping. This is a situation where technology is definitely your friend. There are some awesome apps (MileTracker, Milebug, Notary Gadget) available to help you track your mileage and related travel expenses.
Even if you’re a notary that works for an employer, you may still deduct mileage expenses if you don’t operate from a permanent office. Remember, it’s not just the mileage you get to deduct, but also everything related to your vehicle and travel. This can include part of your car payment, registration fees, insurance, tolls, and even car washes!
Training, memberships, and ongoing education
Many education-related expenses are completely tax deductible.
- Did you do any training or continuing education – in person or online – as a notary this year?
- Did you attend any conferences or networking events to further your notary business?
- Did you have travel expenses to attend these training events?
- Do you belong to any online notary directories that have annual fees?
- Are you a member of the NNA?
- Did you take one of the NNA’s highly regarded Certified Signing Agent courses?
Website, advertising, and forgotten deductions
If you have a website or do any type of advertising for your notary business, these are all things that are tax deductible. Simple things, such as paying for your domain name, email services, etc. are often forgotten deductions. And of course you have a cell phone…don’t forget to deduct a portion of your monthly bill. Your E&O insurance is also deductible as well as your notary bond. Any additional business insurance that you might have should also be considered.
Many notaries are not aware that your “notary fees” are actually exempt from self-employment taxes. Notary fees are that small dollar amount (set by each state) that you are allowed to charge per notarization. It is important to keep a record of all these fees so you can easily deduct them from your other taxable income at the end of the year.
The IRS Publication 17 states that you’ll need to pay taxes on these non-notarial fees on Form 1040 Schedule SE if they exceed $400. This reaffirms how important it is to keep track of all notary-related income such as acknowledgments or sworn affidavits. Larger fees from loans or other types of signings will be reported on Form 1040 Schedule C.
Remember, you need to report all income, but you will receive a 1099 form from those companies that paid you $600 or more for the year.
When to bring in the big accounting guns
After reading this article and seeing things like “Form 1040 Schedule SE”, you might be feeling a little overwhelmed or nervous about doing your own taxes. It is possible to do your own taxes as a self-employed notary, but why put yourself through the stress? There are so many affordable and knowledgeable accountants out there.
My rationale with it is this: the amount of money I’m going to pay a professional to do my taxes will pay for itself in the amount of money I will save on my actual tax bill. For a qualified accountant, your notary business will be a piece-of-cake and they will also be able to ask you questions and likely find deductions you didn’t even consider. They know the latest tax laws and can make the whole tax filing process much less stressful.
If you know any fellow notaries in your area, ask them who they use to do their taxes. This is a great way to find someone who is already familiar with your business. The best way to take advantage of a tax professional and keep your costs down is to have all your record keeping and numbers in order when you go to meet with them.
And when you find someone that you like, it will be even easier to file in future years because they will already have your account set up and will basically be plugging in your new numbers for the current tax year.
So as you can see, taxes don’t have to be scary or overwhelming. Stay organized, keep track of your deductions, and hire a professional at the end of the year.
If you haven’t already, add a Notary Jane membership as one of your deductions for 2020.
by Jordan Ruelas