Yes, notary income is taxable. All fees received specifically for notarial acts must be included in your gross income, which represents the total amount of money received before any deductions.
Understanding Notary Income Taxation
Notaries public, especially those who operate independently or as part of a signing agent business, typically receive fees for services rendered. These fees, which compensate for official notarial acts, are considered taxable income by the Internal Revenue Service (IRS).
Reporting Your Notary Income
According to IRS guidelines, such as those found in IRS Publication 17, all fees collected for notarial acts should be reported as part of your gross income. For most independent notaries or signing agents, this income is considered self-employment income and must be reported on specific IRS forms.
- Schedule C (Form 1040), Profit or Loss from Business: This form is used to report income or losses from a business operated as a sole proprietorship. Most notaries will use this form to detail their notary fees and deductible business expenses.
- Schedule C-EZ (Form 1040), Net Profit from Business: A simplified version of Schedule C, this form can be used by businesses with expenses of $5,000 or less, no employees, and no inventory, among other criteria. Some notaries might qualify for this easier reporting method.
Table: Notary Income Reporting Overview
| Income Source | IRS Reporting Form | Key Action/Implication |
|---|---|---|
| Notarial Act Fees | Schedule C (Form 1040) or Schedule C-EZ (Form 1040) | Report as gross business income. This income is subject to both income tax and self-employment taxes (Social Security and Medicare). |
Key Considerations for Notaries
When dealing with notary income, several tax-related aspects are crucial for compliance and financial management:
- Tracking All Income and Expenses: Maintain meticulous records of all fees earned and business expenses incurred. This is vital for accurate tax reporting and identifying eligible deductions.
- Self-Employment Taxes: As self-employed individuals, notaries are responsible for paying self-employment taxes, which cover Social Security and Medicare contributions. This is in addition to regular income tax.
- Deductible Expenses: Many costs associated with performing notary services are tax-deductible. These can include:
- Notary supplies (e.g., stamps, journals)
- Professional training and education
- Professional liability (Errors & Omissions) insurance premiums
- Mileage for travel to notarization appointments
- Home office expenses (if applicable)
- Membership fees for notary associations
- Estimated Tax Payments: If you expect to owe at least $1,000 in taxes from your self-employment income, you may need to make estimated tax payments throughout the year (typically quarterly) to avoid penalties.
Understanding these aspects helps notaries accurately report their income and take advantage of applicable deductions, ensuring compliance with IRS regulations.
