Being a notary or signing agent complicates tax filing in that other occupations don’t. Not only do you need to know the basic tax rules for your profession, but you’ll also have additional income and expenses on your taxes that others won’t have. Notaries and signing agents must understand their tax responsibilities to keep their obligations affordable.
Here are five tax tips from Nationwide Notary Bond Agency to help you avoid the most common pitfalls when filing and paying taxes as a notary or signing agent.
Tax Tip 1: Get Organized
The first step to filing your taxes is to get organized. It’s easy to lose receipts, forget about income and expenses, and make unprepared mistakes. To avoid these problems, use a spreadsheet or software program to keep track of your income and expenses throughout the year, especially if they are significant enough that they could change how much tax you owe or qualify for.
Keep all receipts together in one place so they don’t get lost in the shuffle at year-end. This way, there won’t be any surprises when it comes time to file.
In addition, make sure all necessary information will be available before filing. This includes bank account statements from banks where checks were written during the year, including canceled checks, credit card statements showing payments made during the year, 1099 forms, and many others.
Tax Tip 2: Be Ready to Document Expenses
The second tax tip for notaries and signing agents is to be ready to document your business expenses. One of the biggest challenges for notaries and signing agents is to be prepared to document business expenses.
If you have any financial decisions or purchases related to your business, make sure you have the receipts and records on hand. This will help if there is a tax audit or other tax problem. You may need to prove to the IRS that your expenses are related to your business, so keep all relevant documentation handy.
Tax Tip 3: Report Your Notary Income Correctly
After you become a notary, if you do not properly report your notary business income to state tax agencies, you may create a potential IRS problem for yourself down the road. It is important to understand how your state perceives the nature of your work.
In some states, if you work as an independent contractor, you should report all income and expenses with the correct form. However, if you are working as an employee, any expense that qualifies as a deduction may be taken out of each paycheck and reported.
You must report all income and expenses with the correct form and all expenses you incur as part of your notary business that you may be able to deduct from your taxes if they qualify.
Tax Tip 4: Learn what you can deduct as a notary and signing agent.
Your notary and signing agent account can be a powerful tax deduction tool. As a notary, you could deduct all the expenses related to your job and specific expenses such as business vehicle expenses, office supplies and equipment, advertising, and professional memberships.
Learning what you can deduct as a notary and signing agent is important to maintaining your business’s financial health. Not only will it help reduce your tax burden, but it will also help you get the most out of your business expenses to maximize your profits.
Tax Tip 5: Ask a Professional for Help
The most important tax tip for notaries and signing agents is to ask a professional for help. Tax laws are complex and filing your return correctly can significantly affect how much you pay. If you’re not a tax professional and need more experience filing taxes, it’s best to seek help from one.
A professional can help ensure that your return is filed correctly and that any deductions or credits you qualify for are taken advantage of.
Importance of Filling Your Income Tax Correctly as a Notary and Signing Agent
Filling your income tax correctly is essential, especially because it can save you money. You may be eligible for certain deductions and refunds depending on the type of work that you do as a notary public or signing agent.
In addition, as a notary and signing agent, it is important to fill out your income tax return correctly and on time. Failure to file correctly could result in an audit, which could result in fines or jail time.
If you fail to report all of your income, the IRS could charge you with tax fraud or evasion charges, which can result in jail time if convicted. Not only will the IRS make sure that you have reported all of your income accurately, but they will also determine if any money has been withheld from your paychecks by employers who should have paid it to the government. They will also check for any deductions that should have been taken out of your paycheck every month but were missed by either yourself or your employer.
If any errors are found during this process, penalties may be imposed, as well as additional taxes owed from previous years’ earnings.
Conclusion
You should be aware of the tax implications of your work as a notary and signing agent. You can save time and money by preparing for tax season but asking for help is also important.
Nationwide Notary Bond Agency is a bonded and licensed notary service that can help you get started as a notary, maintain your commission, and further your education in the field. You’ll be equipped with the knowledge and skills necessary to excel in the highly competitive field of notarial services. Contact us today!
