In addition to general small business tax deductions, there’s a wide range of tax deductions available to fitness entrepreneurs.
Whether you own a gym, a studio, a crossfit box, or you’re a self employed individual in the fitness niche, use this list to double check that you’re claiming all of the deductions you possibly can before you file your next tax return.
Equipment and Gear
Any equipment and gear you purchase that’s used exclusively by your clients qualifies as a business expense. This includes a new set of weights, mats, bars, a sound system, and any other large equipment (like a treadmill). As long as the equipment is used to help you function as fitness instructor, and they’re used for business purposes only, you can write them off on your taxes.
Music and Exercise Videos
If you conduct exercise sessions in groups and have to invest in music, CDs, audio equipment, or exercise videos to successfully perform your sessions, these expenses are all tax deductible. Just make sure you keep all receipts handy so you can prove they were used for group fitness classes.
If you run a yoga studio, or perform one-on-one fitness training out of your home, you may be eligible for the home office tax deduction. Even if you use the space for client emails, consulting calls, and paperwork you could qualify for the deduction if you meet certain requirements.
Keep in mind, your home office work space can only be used for business activities. It can not be a multiple purpose space for personal use. It must be the principal place that you perform work for your fitness business, and maintain a consistent work schedule every week. In addition, the majority of the time you spend in your home office must be spent working on business tasks.
If you meet these requirements, and you’re eligible for the home office deduction, you can use the simplified option to claim a deduction of $5 per square foot—up to a 300 square foot max—for running a portion of your business out of your home.
Travel, Entertainment, Meals
If you meet fitness clients for lunch, or perform your first consulting session over coffee, 50% of all business meals and entertainment costs can be claimed as a tax deduction. The business meals and entertainment deduction is often scrutinized by the IRS. You’ll need to keep your receipts and make clear notes of the purpose of the meeting, who was involved, the location of the meeting, and what the conversation with the client was about.
Internet and Cell Phone
It’s likely that your fitness business can’t run without an internet connection or a cell phone, so both of these expenses are tax deductible. If you use the internet connection or cell phone for personal purposes as well, or you share them with other members of your household, you can only deduct the percentage of these costs that you used for running your fitness business.
An important part of being in the fitness industry is having the right credentials. As a fitness instructor you can deduct any education expenses you incur that are related to certifications, classes, seminars, conferences, and continuing education courses. However, any training costs must be directly related to your fitness business in order to qualify.
You can only deduct education that fall inside the realm of your current business; any costs for education or training that would help qualify you for a new career don’t qualify as business tax deductions.
Professionals in the fitness industry are at a higher risk of encountering injuries, and having a negligence suit brought against them. The National Federation of Professional Trainers recommends that personal trainers purchase liability insurance, so these premiums, as well as regular insurance premiums you pay personally, are a valid business expense.
Business Use of a Vehicle
Do you use your vehicle to meet clients at their homes for fitness sessions? If so, there a range of deductions you can claim for business use of your vehicle.
When claiming a deduction for business vehicles you have two options:
- Use the standard deduction and claim 56 cents per mile
- Claim the actual costs of what you paid for gas, oil changes, and other vehicle related expenses while using your car for the business
Mileage should be tracked throughout the year using a mileage journal or a smartphone mileage tracking app.
If the car was used for both business and personal purposes, simply deduct the portion that was used for business.
The cost of public transportation, taxis, tolls and other expenses incurred while traveling, can be claimed as business travel expenses. This includes meeting clients for work as well as attending seminars and conferences for continuing education.
Subscriptions and Memberships
Any costs you incur for subscriptions, membership fees, fitness journals, and any other regulatory dues for conducting as a fitness professional can be claimed as on your tax return. This includes work-related magazines, music subscriptions, nutrition-related books, and costs of attending competitions.
You probably spend a good portion of your income on workout clothing and exercise gear, but it’s most likely not tax deductible. The rules for deducting work clothing as a business expense are fairly strict. You can only deduct clothing that is necessary to run your business, and that can only be worn while you’re at work (think: branded uniforms and protective gear that you could only wear on the job). If you can wear the clothing in other situations outside of work, it won’t qualify as a tax deductible expense.
Unless clothing is branded with your fitness company’s name, track suits, sneakers, activewear, and shirts can all be worn as regular articles of clothing, and therefore aren’t considered work uniforms. However, if your work gear requires special dry cleaning, you can deduct the cost of laundry.
What Else Qualifies as a Deductible Business Expense?
Fitness businesses often have a vast array of deductible expenses. If you made a business purchase that isn’t on this list, understanding how the IRS qualifies eligible deductions will help you determine whether or not you should claim it on your tax return.
Essentially, anything that’s required for your business to run in an ordinary or necessary manner qualifies as an eligible business expense deduction.
If you’re ever unsure whether an expense falls under the ordinary and necessary qualification, a good rule of thumb is to consider whether or not you would feel comfortable (and honest) justifying the deduction to a tax auditor.
To get the most out of your next tax return, make sure you keep accurate records of your expenses and claim every tax deduction available to your fitness business.