Notaries play a vital role in facilitating legal transactions by verifying the authenticity of signatures, administering oaths, and ensuring the integrity of various documents. In addition to performing these services, notaries often earn income through notarization fees, which must be reported for tax purposes. Understanding how to properly account for this income on your tax return can help you avoid issues with the IRS and ensure that you’re taking advantage of any deductions or benefits available to you as a notary public.

Reporting Notary Income

As a notary public, any income you earn from notarizing documents must be reported as part of your gross income. Notaries who work as independent contractors or operate their own notary businesses will typically file their income on Schedule C (Form 1040), where they list their business earnings and expenses. This includes any fees charged for notarial acts such as acknowledgments, jurats, or certified copies.

It is important to note that notary income is typically exempt from self-employment tax. The IRS allows notaries to exclude this income from self-employment taxes under Section 1402(c)(2) of the Internal Revenue Code. However, to properly claim this exemption, notaries must report their earnings and specifically designate the amount earned from notarial services on Schedule SE (Self-Employment Tax). Only the income from notary services, not other business-related earnings, is exempt from self-employment tax.

Deducting Notary Expenses

As a notary public, you’re also entitled to deduct business-related expenses that are considered ordinary and necessary for performing your duties. Common deductible expenses include:

• Notary supplies: Items such as notary seals, stamps, journals, and certificates are deductible as business supplies.
• Training and certification fees: If you had to pay for training, certification, or continuing education to maintain your notary commission, these costs can be deducted.
• Travel expenses: If you perform mobile notary services and drive to meet clients, you can deduct mileage or transportation costs. Keep track of your mileage and the purpose of each trip to ensure accurate reporting.
• Insurance and bonding costs: Errors and omissions (E&O) insurance and bonding fees are deductible business expenses.

These deductions can be claimed on Schedule C and help reduce your taxable income, ultimately lowering your tax liability.

Keeping Accurate Records

To maximize your tax benefits and avoid issues during an IRS audit, it’s essential to maintain accurate records of your notary income and expenses. This includes keeping receipts, invoices, and a detailed log of your notarial acts, particularly if you travel to clients for mobile notary services. Organized record-keeping will ensure that you have the necessary documentation to support your income and deductions.

Additionally, it’s helpful to maintain a separate bank account for your notary business. This will make it easier to track your income and expenses and provide clear financial documentation when it comes time to file your taxes.

Working With a Tax Professional

While some notaries handle their own taxes, working with a tax professional can be beneficial, especially if you’re new to the business or have complex tax situations. A tax professional familiar with notary tax rules can help you ensure that your income is properly reported, your deductions are maximized, and you’re taking advantage of any available tax benefits.

In summary, notarization fees earned by a notary public are considered taxable income, but notaries can also take advantage of various deductions related to their business expenses. By keeping accurate records, reporting income correctly, and claiming the appropriate deductions, notaries can successfully manage their tax obligations while reducing their overall tax burden.