As a self employed personal trainer or fitness gym owner, managing the business can get quite overwhelming especially when you throw taxes in the mix. Below, we've provided a listing of some tax deductions & credits that are often overlooked.
confused personal trainer taxes
Let's First Start With the Typical Tax Deductions
As the IRS states, all business deductions must be both "ordinary and necessary" -- or basically common & appropriate for your trade or business. In the case of a self-employed fitness professional or personal trainer common business deductions include: music tapes, insurance, business-related meals, federal/state/local taxes, interest on any debt, rent expense, retirement plans, travel expenses for business purposes, office supplies, communication mediums (phone, cell, fax, TVs), promotional/advertising expenses, and health insurance.
Surprising or Often Overlooked Tax Deductions & Credits
1) Self Employment Tax (15.3% = 12.4% Social Security/2.9% Medicare)
It is shocking how many people miss this tax deduction which maybe be so obvious that it is overlooked. You can deduct 50% of your self employment tax.
2) Working From Home Tax Deductions
Believe it or not, if you work out of your home you can decipher between business & personal expenses for tax deduction purposes. For an item such as a credit card machine, it is an obvious direct business expense. Rent on the other hand would be treated as both a business & personal expense since it satisfies those two purposes. The way to calculate the business portion of the rent expense is to divide the amount of square feet used for business purposes by the total square footage of your home.
Personal vs. Business Home Expense Scenario
If your business office was 500 square feet and your entire home was 2,000 square feet, you would be able to treat 500/2,000 or 25% of your of rent expense as a business expense. Please note that the business must be up and running to treat this expense as business expense. So if you launched your business in July, you could only claim the business expense from July onward.
The Business Portion of These Expenses Are Deductible
Real Estate Taxes
3) Health Publications/Journal Subscriptions
Publications that the gym subscribes to or uses for educating their clientele can be treated as a tax deduction because it is common and appropriate in the trade.
4) Charitable Contributions
An example of this tax deduction would be donating old gym equipment to a qualified organization like a school. Tax deductions for Donating to Haiti right now would also make sense.
5) Hiring Certain Employees Coming From Less Fortunate Groups.
While trainers need to be fit, you can certainly hire certain employees for cleaning & admin work. There is The Work Opportunity Tax Credit which allows employers to deduct up to ,400. Generally, the tax credit is 40% of the 1st ,000 in 1st yr wages or ,400.
Tax Credits Are Higher For Certain Individuals
Disable Veterans Credit is up to - ,800
Long-term Family Assistance Recipient - up to ,000 if hired over 2 yrs.