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Notary Bulletin

4 Tips For Notaries Claiming Home Office Tax Deductions

Income tax tips for Notaries

Updated 1-23-20 for 2019 tax year. April is fast approaching and Notaries want to get the most out of their 2019 tax returns. The Notary Bulletin asked Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block, for tips for those claiming a home office deduction for the 2018 tax year.

This is general information only, and every person’s tax situation can differ when it comes to general Notary tax tips and mileage deductions. If you have specific questions about your tax situation, contact the IRS or your tax advisor.

Reminder: Starting in 2018, the home office deduction is available only to self-employed taxpayers. The deduction cannot be claimed by employees because the overall deduction for employee business expenses is not available.

What are the most important steps Notaries should follow when claiming a home office deduction? 

In order to claim the deduction, your home office must be used regularly and exclusively for business purposes. You must designate either a separate room in the house or an area of a room that will be devoted solely to your trade or business.

There are some exceptions to the “exclusive” test for an area used to store inventory, for instance, and also for areas used for day care businesses.

A simplified “safe harbor” option allows you to deduct $5 per square foot to a maximum of 300 square feet (maximum deduction $1,500) without extensive recordkeeping. Extensive recordkeeping is not required for the safe harbor option, but the maximum $1,500 deduction is designated for a larger room (about 20' x 15'). If your home office is smaller, the deduction is smaller too.

What records should Notaries keep related to home office deductions?

The home office deduction allows you to claim as business expenses a portion of both deductible expenses, such as mortgage interest and real estate taxes, and otherwise nondeductible personal expenses including utilities, home insurance, repairs and depreciation. However, you must keep all statements and receipts to substantiate these claims.

Mortgage and real estate statements should be kept as deductible expenses, too.

Where is the home office deduction claimed?

Self-employed taxpayers report the expense on Schedule C, line 30. Taxpayers using the safe harbor method metnioned above can use a worksheet in the Schedule C instructions to calculate the deduction. Those not using the safe harbor must also complete Form 8829, Expenses for Business Use of Your Home, to calculate the deduction.  

How will a recent tax law change affect the home office deduction starting in 2019 (and possibly retroactively to 2018)?

There are no specific changes to the home office deduction, but extender legislation that passed at the end of 2019 could indirectly affect the deduction.

Specifically, the deduction for mortgage insurance premiums (including private mortgage insurance or “PMI” had expired at the end of 2017. Congress has retroactively extended this deduction for 2018 through 2020.

The change could affect Notaries who calculate the actual home office deduction (i.e. do not use the safe harbor method). It means that the portion of mortgage interest allocated to the home office deduction may increase and thus the deduction may increase as well.

Because the change is retroactively extended to 2018, Notaries who claimed the home office deduction in 2018 and paid mortgage insurance premiums should consider amending their returns.

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

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5 Comments

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Judy Taylor

28 Feb 2016

What about miles driven? If I have a permanent notary sign in my car window with my phone number, am I allowed to claim all the mileage in my state as advertising?

National Notary Association

29 Feb 2016

Hello. For more information about claiming mileage deductions, please see our article "A Notary's Guide For Claiming Mileage Deductions At Tax Time": https://www.nationalnotary.org/notary-bulletin/blog/2015/02/notary-guide-mileage-deductions-tax

Chuck Alexander

12 Mar 2018

Thank You for lnformtion on Notary tax credit.

LM

10 Feb 2020

Can you claim a home office deduction if you are working from home meet all the requirements but are renting not buying?

National Notary Association

11 Feb 2020

Hello. You would need to contact a tax professional or the IRS to answer this question.

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