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joanbergst

California
349 Posts

Posted - 03/18/2009 :  10:29:40 PM  Show Profile  Visit joanbergst's Homepage  Reply with Quote
Great response to help new notaries understand "self employment taxes."



Joan Bergstrom
24/7 To Riverside & San Bernardino Counties.
State Notary exam teacher for www.notaryclasses.com
www.joanbergstromnotarypublic.com
joan.bergstrom@yahoo.com
Cell: 951-522-4919
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lkassis

Iowa
58 Posts

Posted - 03/16/2009 :  12:08:11 PM  Show Profile  Visit lkassis's Homepage  Reply with Quote
Maybe this will help you understand what SE tax is.

Image, or pull out an old paystub from an employer. You should see a withholding item called Social Security and one called Medicare. Each of these will show a deduction from your gross paycheck that was taken from your gross pay. The approx. % taken from your gross pay would be 7.65% and the approx Medicare taken from that paycheck is 2.9%. What you have to pay (taken from your paycheck) has to be matched by the employer. So the employer also has to pay in 7.65 % SS on your behalf in addition to sending in the part they withheld from your pay and the same with the Medicare.

If you are self-employed, you are acting as the employee and the employer so you have to deduct (pay in) the 7.65% for you as the employee and you, as the employer, have to match that amount and the same for Medicare.

Here is a link to the IRS page that explains it:
http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

Explanation of what we used to know as FICA:
http://www.ssa.gov/mystatement/fica.htm


Linda Kassis
United Notary Association (UNAA)
www.unitednotaries.org
www.halitek.com

If you are not riding the wave of change, you may find yourself under it. Ride the wave with the UNAA.
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PWinFL

Florida
469 Posts

Posted - 03/14/2009 :  05:45:18 AM  Show Profile  Visit PWinFL's Homepage  Reply with Quote
But it's not a "Social Security" tax, per se, per the US government. It used to show as FICA, which is correct. (FICA = Federal Insurance Contributions Act)

From the SSA website:
quote:
Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act. The payroll taxes are sometimes even called "FICA taxes."

In the original 1935 law the benefit provisions were in Title II of the Act (which is why we sometimes call Social Security the "Title II" program.) The taxing provisions were in a separate title, Title VIII. There is a deep reason for this, having to do with the constitutionality of the law (see discussion of the Constitutionality of the 1935 Act).

As part of the 1939 Amendments, the Title VIII taxing provisions were taken out of the Social Security Act and placed in the Internal Revenue Code. Since it wouldn't make any sense to call this new section of the Internal Revenue Code "Title VIII," it was renamed the "Federal Insurance Contributions Act."

The payroll taxes collected for Social Security are of course taxes, but they can also be described as contributions to the social insurance system that is Social Security. Hence the name "Federal Insurance Contributions Act."

So FICA is nothing more than the tax provisions of the Social Security Act, as they appear in the Internal Revenue Code.

Thoroughly confusing, as is most of the IRS.

Never drive any faster than your guardian angel can fly.

I am not an attorney licensed to practice law in the State of Florida,
and I may not give legal advice or accept fees for legal advice.


Visit us online at http://www.PAWnotary.com
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Renee

Michigan
549 Posts

Posted - 03/14/2009 :  02:47:16 AM  Show Profile  Visit Renee's Homepage  Reply with Quote
I suspect this annual topic is confusing to those who are doing their taxes for the first time as self-employed, because the Social Security tax and tax form are called "Self-Employment Tax" and "Schedule SE". If only the gov't would call these the "Social Security Tax" and "Social Security Tax Form", it would be a lot easier to figure out (and explain)!



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LindaH

Florida
1612 Posts

Posted - 03/13/2009 :  2:40:50 PM  Show Profile  Visit LindaH's Homepage  Reply with Quote
ALL of your fee is reportable as "income" and you have to pay federal tax on the full amount....what is exempt from self employment tax is the amount you are allowed to charge per signature or per notarial act by your state law (your notary fee).

Example: In FL, we can charge up to $10 per notarial act. I accept a signing for $150.00 - the signing has 8 notarizations - the entire $150 is reported as income for federal tax purposes but for Self Employment taxes, that fee is broken down as $80 notarial fees and $70 income - only the $70 is subject to self-employment tax.

Now, you do it that way if you don't want to pay taxes on the portion of your fee that represents your notary fee - but keep in mind your Self Employment tax is equivalent to what a regular employer would pay into social security for you...so by not paying that tax you're essentially shorting your social security contributions....many who can see their way clear to do it just pay self employment taxes on the entire amount, thereby contributing to social security.

Hope this helps.

Linda
www.notarydepot.com/notary/lindah
http://www.notary.net/websites/LindaHubbell
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kandy1099

Pennsylvania
121 Posts

Posted - 03/13/2009 :  12:04:32 PM  Show Profile  Visit kandy1099's Homepage  Reply with Quote
But, at what amount can be claim as notary fees and what amount must be claimed at income?

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PWinFL

Florida
469 Posts

Posted - 01/28/2009 :  09:28:44 AM  Show Profile  Visit PWinFL's Homepage  Reply with Quote
You report your business income and expenses on Schedule C. You report your self-employment income (from Schedule C) on Schedule SE. On line 3 of Schedule SE, you can exclude your notary fees when calculating the SE tax. (The SE tax is equivalent to what an employer pays, or about 7%.) The SE tax is then carried over to Schedule C. And finally, the net income from Schedule C is carried back to Form 1040.

If this is your first year in doing tax reporting with self-employment income, I suggest seeking the assistance and advice from a qualified tax preparer.

Never drive any faster than your guardian angel can fly.

I am not an attorney licensed to practice law in the State of Florida,
and I may not give legal advice or accept fees for legal advice.


Visit us online at http://www.PAWnotary.com
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charlise424

Florida
6 Posts

Posted - 01/28/2009 :  08:27:50 AM  Show Profile  Visit charlise424's Homepage  Reply with Quote
If Notary fees are exempt how to you allocate income.

Charlise Darby
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PWinFL

Florida
469 Posts

Posted - 01/16/2009 :  10:46:42 AM  Show Profile  Visit PWinFL's Homepage  Reply with Quote
Kandy ... If you accountant doesn't understand how 1099's are issued, I suggest it may be time to get another accountant. At least someone else to do your tax work. 1099's are very basic IRS reporting documents that any tax professional would know about. Tax preparation software, such as TurboTax, will ask you about ALL you income, if you go through the interview process; including W-2 and 1099 reported income.

Never drive any faster than your guardian angel can fly.

I am not an attorney licensed to practice law in the State of Florida,
and I may not give legal advice or accept fees for legal advice.


Visit us online at http://www.PAWnotary.com
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kandy1099

Pennsylvania
121 Posts

Posted - 01/16/2009 :  08:11:02 AM  Show Profile  Visit kandy1099's Homepage  Reply with Quote
Thank-you Linda! You are the first person to give me a straight answer. Even the accountant I spoke with played games with when it came to answering my question.

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LindaH

Florida
1612 Posts

Posted - 01/16/2009 :  07:25:30 AM  Show Profile  Visit LindaH's Homepage  Reply with Quote
Of course you do, Kandy - you have to claim ALL of your income - companies are not required to send 1099's to contractors unless they've paid them over $600 - and then, I believe, only if the funds are out of an operating account - funds disbursed from a trustee/escrow account aren't subject to this 1099 regulation.

All of your income is subject to federal income tax - the amount attributable to your notary fees is exempt from self-employment tax (your equivalent of an employer's Social Security contribution).

Linda
www.notarydepot.com/notary/lindah
http://www.notary.net/websites/LindaHubbell

Edited by - LindaH on 01/28/2009 12:12:55 PM
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kandy1099

Pennsylvania
121 Posts

Posted - 01/16/2009 :  07:00:49 AM  Show Profile  Visit kandy1099's Homepage  Reply with Quote
So do I have to claim any income from companies under $600?

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Doris_CO

Colorado
107 Posts

Posted - 01/11/2009 :  2:44:28 PM  Show Profile  Reply with Quote
You'll receive a 1099 from those companies that have paid you $600.00 or more. Those companies that have paid you less then $600 this year do not, and probably won't, send out a 1099. Please check your Turbo Tax program to determine if it computes your taxes as a Notary Public. Your notary fees are not subject to self-employment taxes, but, depending on your age and when you plan to draw Social Security, you might want to contribute as much as you can.

Doris
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kandy1099

Pennsylvania
121 Posts

Posted - 01/11/2009 :  1:49:15 PM  Show Profile  Visit kandy1099's Homepage  Reply with Quote
Does everyone send you a 1099 for the services provided during the year? Are they required to? I asked an accountant, but he couldn't tell me... What does everyone else do for their taxes? I use Turbo Tax, and it works great, but I am wondering which clients are going to be sending me a 1099...

Any advise is appreciated... thanks!

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