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469 Posts

Posted - 05/20/2010 :  5:54:08 PM  Show Profile  Visit PWinFL's Homepage  Reply with Quote
I don't think that the IRS would accept signing agent income as "other income" since a trade or business has been defined as "holding one's self out to others as engaged in the selling of goods or services." (Deputy v. du Pont, 308 U.S. 488 (1940), Frankfurter, J., concurring) Now, if the signing agent only did this once or twice, then maybe it could be considered other income. But activities that are done frequently, usually are considered as a trade or business.

An article on the subject can be found at http://www.journalofaccountancy.com/Issues/2009/Jul/20091639.htm

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.

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5 Posts

Posted - 05/20/2010 :  4:49:23 PM  Show Profile  Visit ALFRED WHITE's Homepage  Reply with Quote
On taxes paid for notary fees one has 2 options. The first is to pay self-employment taxes on a Sch C this would mean you would have to pay 15.3% S/E tax also a federal income tax for whatever tax bracket you are in. The 2nd option is to report the monies as other income and just pay the federal income tax. Option #2 is legal and the way the IRS would prefer it to be done.

Alfred White
H&R Block Franchise Owner
Houston Texas
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553 Posts

Posted - 05/16/2010 :  9:27:41 PM  Show Profile  Reply with Quote
She scared me to Linda...lol. I am glad you cleared that up NewNotary.

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18 Posts

Posted - 03/15/2010 :  8:21:19 PM  Show Profile  Reply with Quote
yes, it's hypothetical. I also meant to say as you pointed out, notarized documents. thanks for the help, I appreciate it.
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1754 Posts

Posted - 03/15/2010 :  2:50:57 PM  Show Profile  Reply with Quote
Okay..gonna give this a try but it's a long answer..couple things I want to touch on here..

1. Self-employment taxes are the equivalent of the Social Security withheld from one's paycheck by an employer.

2. The fees we receive for notarizations (our notary fees) are exempt from self-employment tax BUT are fully taxable on our federal return as income. Many continue to claim all fees and pay the SE tax on it in order to pad their social security benefits.

So, in your example, if you charge $15/"document"(?), you have 4 ($60) and you're paid $100, the entire $100 is subject to federal income tax but only $40 of it is subject to self-employment tax.

Now, I'm assuming you made those numbers up for discussion purposes only, and I certainly hope you did. If not, and those are the fees you're charging, I'm not sure where you are...but how are you charging per document and not per notarization or per signature. I've never heard of that in all my years in this business. You're only allowed to charge the fees mandated by your state for your notarizations, usually found in your handbook or on your SOS website - and most commonly charged per notarization or per signature, not by the document. And I don't know of any states that allow the notary to charge $15/document (and no I don't know it all but I read a lot of forums and communicate with many notaries - AND I stayed at a Holiday Inn Express a couple weeks ago...:)...)

Hope this helps.

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18 Posts

Posted - 03/15/2010 :  2:14:56 PM  Show Profile  Reply with Quote
When getting a 1099 from a particular company we are required of course to pay taxes. I had read or at least I thought I did, that social security may be partially exempt since each notarized document counts towards the amount. Example: 4 docs at $15.00 each, equals 60.00. If the total charge is 100.00, do you pay social security on the remaining 40.00 only?
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