As a Notary Public, your job revolves around accuracy, professionalism, and serving your clients’ needs. While notarial services are your primary focus, navigating the world of taxes as a Notary Public can be daunting, especially if you’re earning income from your notary work. This guide breaks down everything you need to know about taxes as a Notary Public, ensuring that you’re prepared and compliant when tax season rolls around.
1. Understand Your Income Sources
Notary Publics often have diverse income streams. Understanding how to categorize and report them is the first step to accurate tax filing. Here are the most common types of income you might encounter:
Notarial Fees: Payments received for administering oaths, witnessing signatures, and other notarial acts. These fees are typically exempt from self-employment tax (more on this later).
Travel Fees: If you’re a mobile Notary, you might charge clients for mileage or travel time. These fees are taxable and must be reported.
Additional Services: Many Notaries offer related services, such as loan signing, fingerprinting, or document preparation. These earnings are taxable as business income.
Keep detailed records of all payments you receive, including invoices and receipts, to make filing taxes easier.
2. Know the Tax Deductions Available to Notaries
One of the benefits of being a Notary Public is the ability to deduct business expenses. Here are some common deductions you may qualify for:
Notary Supplies: Items like your stamp, journal, ink, and seal are deductible.
Licensing Fees: Fees for your Notary commission and any required renewals can be deducted.
Professional Memberships: Memberships to organizations like the National Notary Association (NNA) or local notary groups are deductible.
Bonding Costs: Any costs associated with your notary bond are deductible.
Travel Expenses: If you’re a mobile Notary, mileage, tolls, parking, and even a portion of your car’s maintenance costs may be deductible. Use a mileage tracking app to keep accurate records.
Home Office Deduction: If you maintain a dedicated workspace at home for your Notary business, you can deduct a portion of your rent, utilities, and internet costs.
Marketing Costs: Business cards, flyers, website hosting, or ads promoting your services are deductible expenses.
Training and Education: Costs for continuing education, workshops, or certifications are deductible if they relate to your business.
3. Understand Self-Employment Tax Exemptions
Notaries have a unique advantage when it comes to self-employment tax.
Exemption for Notarial Acts: Income from official notarial acts is exempt from self-employment tax. This means that while you’ll still report this income on your tax return, you won’t pay the additional 15.3% self-employment tax on these earnings.
Non-Notarial Services: Any income from services like loan signing or document preparation is subject to self-employment tax.
Pro Tip: Keep your income from notarial acts and other services separate in your records to simplify reporting.
4. Quarterly Estimated Taxes: Are They Necessary?
If you earn significant income from your notarial services, you may need to pay quarterly estimated taxes. This ensures you don’t owe a large sum at the end of the year and helps you avoid penalties. To calculate your estimated taxes:
Add up your total income (both notarial and non-notarial).
Subtract your deductions.
Use IRS Form 1040-ES to estimate how much tax you owe.
Set aside a portion of your income each month to cover these payments.
5. Keep Accurate Records
As a Notary Public, you’re already accustomed to keeping meticulous records. Apply the same diligence to your tax documents. Key records to maintain include:
Income: Copies of invoices, receipts, or payment confirmations.
Expenses: Receipts for supplies, travel, memberships, and other deductible costs.
Mileage: A log of business-related travel, including the date, purpose, and distance traveled.
Consider using bookkeeping software like QuickBooks, Wave, or a simple spreadsheet to organize your records throughout the year.
6. File the Correct Tax Forms
The forms you’ll need depend on the structure of your business and your income. Common forms include:
Schedule C (Form 1040): To report income and expenses for your notary business.
Schedule SE (Form 1040): To calculate self-employment tax (excluding notarial fees).
Form 1040-ES: For estimated quarterly tax payments.
Form 4562: To claim depreciation on assets like a computer or vehicle used for your business.
7. Work with a Tax Professional
Navigating taxes as a Notary Public can be complex, especially if you’re offering additional services. A tax professional familiar with notary-specific rules can help you:
Maximize deductions.
Ensure compliance with IRS regulations.
Avoid overpaying taxes.
8. Tips for Notaries Doing Taxes as a Side Hustle
If you’re a Notary Public offering tax preparation services, consider the following tips:
Stay Certified: If you’re preparing taxes for clients, ensure you’re certified as a tax preparer and up-to-date on tax laws.
Market Your Services: Promote your tax prep services to your existing notary clients. Create business cards, flyers, and social media posts highlighting your expertise.
Offer Bundled Services: Provide discounts for clients who use both your notary and tax preparation services.
Stay Organized: Keep separate records for notarial income and tax prep income to simplify filing and ensure accuracy.
Conclusion
Being a Notary Public offers unique opportunities for additional income, but understanding your tax obligations is essential. By keeping detailed records, maximizing deductions, and staying informed about tax laws, you can confidently navigate tax season and keep more of your hard-earned money. Whether you’re filing your own taxes or offering tax preparation as a side hustle, this guide has you covered.
If you’re unsure about any aspect of your taxes, consult with a tax professional to ensure you’re on the right track. Here’s to a stress-free tax season!
Get your free 2024 Refund estimate with our App Download
