Tip: Actual notary fees are not taxable by the IRS as income. Here’s how it works. Each state dictates a maximum allowable fee you can charge per notarized signature. For instance, you do a loan signing for $125 at someone’s home, and there are two people signing, and six of the documents are notarized documents. In California that would be $10 (allowable fee per notarized signature), times 6 documents, times 2 people, equals $120 of the $125 you charged is non-taxable self-employment income. The IRS Instructions for Self-Employment Tax (SE-1), under the section, “Income and Losses Not Included in Net Earnings From Self-Employment, ” Item 2, states:
“Fees received for services performed as a notary public. If you had no other income subject to SE tax, enter “Exempt–Notary” on Form 1040, line 58. However, if you had other earnings of $400 or more subject to SE tax, enter “Exempt–Notary” and the amount of your net profit as a notary public.”
So it’s very important, and advantageous to you as well, to keep scrupulous records of your actual notarial fees separate from your other fees, such as travel or signing service fees. Tally up the notarial fees first and keep a separate record of them. These will not be taxed. If at the end of the year all you have is exempt notary fees, you’re done. If you had other taxable self-employment income over $400, then you include those fees in income, but then subtract them out on the proper line as exempt Notary income. It sounds more complicated than it actually is. Just make sure you look for the exemption because it’s easy to miss. If you have someone prepare your taxes, make sure you ask them about it. Some tax preparers haven’t come across it before and will also miss it.