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3 Tax Mistakes Notaries Should Avoid

Self-Employment and Small Business Tax Mistakes to AvoidUpdated 2-8-17 for 2016 tax year. April is just a short time away, and that means it’s time for Notaries to get their tax returns in to the IRS. But be careful not to make mistakes that can cost you a refund. Paul Dion, CPA and author of the book “The Ten Most Expensive Tax Mistakes That Cost Real Estate Agents Thousands,” shared three tax errors Notaries should look out for when filing self-employment or small business taxes.

1. Not asking your tax adviser about possible small business tax deductions.

Dion says many of his clients assume that part of their business isn’t deductible, only to ask him later and find out they can claim it. Don’t be afraid to ask your tax adviser about possible Notary business deductions, he urged. “Be open with your tax adviser — ask lots of questions,” Dion said. For example, Dion said commission renewal fees, professional association membership dues and E&O policies can often be claimed as deductions. "Remember that the rule is if it is an 'ordinary and necessary' business expense, then most likely it is deductible," Dion said.

2. Not documenting your travel mileage.

If you are a Notary Signing Agent or offer other mobile Notary services, you can deduct your travel mileage for assignments — but only if you document it thoroughly, Dion said. “Keep good records, or the IRS will not allow you to use your mileage as a deduction,” he said.

Whether Notaries record mileage information in their journals, tax preparation software, or other record-keeping tools such as Notary Gadget or MileIQ, the NNA recommends that your record clearly identifies work-related Notary travel mileage versus non-business travel mileage.

3. Not keeping track of gifts to clients.

Notaries who provide gift cards, stationery or other complimentary items to signers need to know that the IRS limits gifts to clients to a maximum value of $25 per person per year. Dion said Notaries who provide complimentary or promotional items to clients should consult with a tax professional to determine if they qualify as gifts or marketing expenses.

Remember that each Notary’s tax situation may be different. If you have questions about your specific tax situation, consult with a qualified tax preparer or adviser.

David Thun is an Associate Editor at the National Notary Association.

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Add your comment

Stanley Walker

21 Jul 2015

When I filed my 2014 tax return I checked the box about notary income and did not pay self employment taxes for 2014. My first year as a notary. If I file an amended return for 2014 and uncheck the notary income box will I pay the self employment tax? Over all for 2014 my notary business operated as a loss.

Barbara Citty

26 Feb 2016

Notary fees are reported under other income on the first page of your tax return. They are not subject to self-employment tax. This information is clearly stated on the Self-Employment information page from the IRS. All other business income and expenses are reported on Schedule C.

Roger Rill

29 Feb 2016

It's important to be aware that just because you CAN take the SE tax exemption, does not necessarily mean you SHOULD take it. Doing so can affect your future Social Security earnings for retirement or disability. NSAs should consult with their CPA or EA to determine which is best for their situation.

barry eisenstat

05 Aug 2016

I have a client who has a mobile notary business that is an S Corporation for tax purposes - since the owner is not self-employed how does he claim the notary exeption to self - employment tax - does he take wages and claim an exemption from social security tax? An S Corporation owner is supposed to take reasonable compensation in the form of W-2 wages.

National Notary Association

05 Aug 2016

Hello. In this case, we recommend that you speak with a qualified tax preparer or tax attorney for assistance.

Michael Gonzalez Jr.

06 Mar 2017

Regarding the above comment about "Other Income" for notary income: This is incorrect. ALL self-employment income (for purpose of notary income) belongs on a Sch C or C-EZ. Whether you receive a 1099-MISC from a company who utilized your services to provide notary services or you were a complete freelance notary, all fees received as a notary should be reported properly. Your fees as a notary are not subject to SE tax, but certain activities that are in close association (such as if you are an NSA) are. It is highly encouraged for you to keep meticulous records to separate notary services from NSA or other non-notary services to account for what is/is not subject to SE tax. - Source: I'm a RTRP with the IRS and a preparer with a popular 'green' color company

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