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Attorney that gets Notary income....is the Notary income excluded from SE tax?

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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM

Notary fees are exempt from SE taxes, does that hold true for even an attorney?

His records have the notary fees and attorney fees separated, but the EA that prepared his prior years returns didn't make any adjustments for the SE tax on the notary income. 

Ive been digging around online, Im not finding anything concrete.   

I asked in a FB group of accountants and someone said that since this is ancillary to his law practice that it wouldn't be exempt, but I cant find anything online about it.

Didn't we have an attorney that use to frequent in here...BobKaufmann...was that his name?


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 15
last updated ‎December 07, 2019 5:32 AM

Sounds like part of the law practice and I would vote for it to not be exempt.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

View solution in original post

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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
@BobKamman   sorry I misspelled your name above!      Can you help me out here at all?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 12
last updated ‎December 07, 2019 5:32 AM
How large of a number is it?  It looks like the official notary fee in California is only $15 per signature.
https://www.google.com/search?q=california+notary+fee
https://notary.net/2017-new-california-notary-laws/
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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
I am a California Notary, yes, we get the big bucks!  LOL  Its quite a substantial amount (about 10% of his total self employment income) he has shown separate from his attorney income, Ive got a call into him to clarify if it was all "CA Notary fees" or if other amounts got included in with it.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 12
last updated ‎December 07, 2019 5:32 AM
Looking at the tax laws, a notary is not considered a "Trade or Business" (and therefore not subject to SE tax) because it is a "Public Office".  When it is directly in connection with his attorney business, that MIGHT void the "Public Office" exemption from SE tax.
https://www.law.cornell.edu/uscode/text/26/1402#c
https://www.law.cornell.edu/cfr/text/26/1.1402%28c%29-2
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Level 10
last updated ‎December 07, 2019 5:32 AM
You get $15 per signature on the west coast!!!  We only get $5 here in VA.  Up from the $2 it used to be in the 1990s when my mom worked in the records department at the PD.

I have no authority other than Section 1402(c)(1):

https://www.law.cornell.edu/uscode/text/26/1402#c_1

Trade or business
The term “trade or business”, when used with reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 (relating to trade or business expenses), except that such term shall not include—the performance of the functions of a public office, other than the functions of a public office of a State or a political subdivision thereof with respect to fees received in any period in which the functions are performed in a position compensated solely on a fee basis and in which such functions are not covered under an agreement entered into by such State and the Commissioner of Social Security pursuant to section 218 of the Social Security Act"

I would guess that, as long as the notary can properly account for the income (and they're probably required to keep log books), it should be exempt from SE tax, regardless of the attorney "day job".
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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
we have to keep a record of notarial fees in our notary journal....hes got it all recorded separately, I'm hoping its from his journal!

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 9
Level 9
last updated ‎December 07, 2019 5:32 AM
I think it's  $1.50 in Ohio.
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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
Costs me over $400 every 4 years to renew my commission, I don't even make that much off notarizations in 4 years!   I keep it for the convenience of my clients, I don't even charge the $15 fee unless I have to make a special trip into the office to see them.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 9
Level 9
last updated ‎December 07, 2019 5:32 AM
I think the cost here is less than 100 to renew every 5 years.  I don't charge either.
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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
....and the notary income would need to be excluded for QBI purposes, yes my train of thought on this is still chugging down the tracks!  :joy:

I had a huge anxiety attack at 10pm last night, sometimes I feel like I'm kickin' ass and taking names, and other times I feel like I have no clue what I'm doing and want to cry!    

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 15
last updated ‎December 07, 2019 5:32 AM

Sounds like part of the law practice and I would vote for it to not be exempt.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

View solution in original post

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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
Id love to find it in writing somewhere!

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 15
last updated ‎December 07, 2019 5:32 AM
It is in writing - look at my post :wink:
ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 15
Level 15
last updated ‎December 07, 2019 5:32 AM
:smile::smile:

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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