1. The Exemption Explained
Fees received for notarial acts may be exempt from self-employment tax under certain circumstances. This exemption applies only to fees charged for performing notarial acts as a notary public, not for other services provided in conjunction with notarization.
2. What Qualifies as a Notarial Act?
A notarial act is an act authorized by state law to be performed by a notary public. This typically includes acknowledgments, jurats, oaths, and affirmations. The exemption applies to fees specifically charged for these acts when performed in your official capacity as a notary.
3. Loan Signing Services
Loan signing agents typically perform services beyond notarization: document delivery, explaining terms (within permitted scope), ensuring proper execution, and returning packages. These services are not exempt from SE tax, even when performed by a commissioned notary. Only the fee specifically attributable to notarization may qualify for exemption.
4. Allocating Fees
When charging a single fee that includes both notarial and non-notarial services, you must allocate between exempt and non-exempt portions. For example, if a signing fee is $100 and the notarization portion is valued at $15, only $15 may be exempt from SE tax. This allocation requires documentation supporting your methodology.
5. Documentation and Proof
Maintain records showing your fee structure and how you allocate between notarial and other services. Include separate line items for notarization fees when possible. Per-stamp recordkeeping can support exempt fee calculations if maintained consistently.
6. State Variations
State law affects what constitutes a notarial act and permissible fee structures. Consult your state's notary handbook or regulatory authority for specifics. The federal SE tax exemption applies regardless of state law, but state law defines what qualifies as a notarial act.