As a notary, you should include all fees received for notarial acts in your gross income on a Schedule C (Form 1040) according to IRS Publication 17, as long as you are a sole proprietor or single-member LLC. However, you should be aware that you cannot charge or receive a fee for services over the maximum amount prescribed by state notary laws. In addition, you may be able to charge additional fees for mileage/travel expenses when going to a signer’s location, depending on the state.
It’s important to note that notary fees are considered taxable ordinary income and are not subject to self-employment tax. However, other fees or services that you offer may be subject to both ordinary income tax and self-employment tax. For example, if you have a notarial services business that earned $9,000 last year and $2,000 of that was from fees earned for specific notarial acts, the $2,000 would be exempt from self-employment tax, but the remaining $7,000 would be subject to self-employment tax. If your net self-employed earnings are less than $400, you are not required to pay self-employment tax.
Good record keeping is essential to differentiate between notary fees and other fees/services in order to exclude notary fees from self-employment tax. If you are a mobile notary and plan to deduct mileage or travel expenses, you should maintain a detailed mileage log showing the date, miles traveled, and assignments. Some deductible expenses for your business may include travel to customers’ homes or businesses, notarial supplies, seminar tuition, notary association membership fees, and Errors and Omissions (E&O) insurance. The cost of your bond for the year may also be deductible on Schedule C.
If you are a notary signing agent and receive more than $600 per year from any one company/client, you may receive a Form 1099MISC at the beginning of the following year. However, you are still required to report all income earned on Schedule C, even if you don’t receive a 1099MISC from every company for which you perform notary services. You may also be required to file a Schedule SE if the signing agent portion of your business, minus the notary fees, earns a profit of more than $400.
As a final note, you have the option to consider paying self-employment tax on your notarial services that are treated as ordinary income and generally exempt from self-employment tax. This can help contribute to your Social Security and Medicare for your later years.