1. Business insurance (and other kinds of insurance)
Insurance claims are common in the fitness industry. It’s smart to have personal trainer insurance to help protect your business from financial losses caused by medical expenses or lawsuits.
Many kinds of business insurance are tax-deductible, especially if they’re required. Coverage like general liability or workers’ compensation can often qualify for a deduction. The insurance premiums you pay are generally tax-deductible as long as they meet IRS guidelines. Here’s a rundown of typical small business insurance types a personal trainer can use as part of their deductions:
- General liability insurance: If you’re training out of other people’s homes, you may need this coverage to protect you from damage and physical injury from personal training. For example, if someone trips over your equipment.
- Professional liability insurance: Since your job is to give professional fitness advice, you could encounter accusations of professional mistakes. Professional liability insurance financially covers you from such accusations.
- Workers’ comp insurance: Most states require this coverage if you have employees. It covers expenses and lost wages due to injury.
Similarly, if you’re self-employed, you may also be able to deduct your health insurance, dental insurance and long-term care premiums.
2. Car expenses and mileage
If you have a vehicle that you use exclusively for your personal training business, such as driving to a client site, a gym, health club or other fitness facility, its cost for use is usually a deductible expense.
However, if you use your personal car for business, you will need to calculate your business use. Deductions can include driving to and from clients’ homes for training sessions or running business-related errands. You cannot track commuting miles, though.
For that portion of your car expenses, you can choose to deduct either actual expenses or a mileage rate. The IRS guidelines are fairly extensive but reasonably easy to follow.
The current IRS standard mileage rate for tax deductions is 65.5 cents per mile but changes annually. You can use apps to easily track your business mileage to help you keep accurate records.
You can also deduct expenses related to commercial auto insurance. Commercial auto insurance helps pay for damages related to accidents in work vehicles.
3. Business equipment and gear
In general, any gear that you use exclusively to train clients is tax-deductible come tax season.
Free weights, treadmills, weight machines, exercise mats, water fountains and even sound systems may qualify if you use them solely for your clients. Workout DVDs, paid music streaming services and the like are also eligible, again provided that they are used for business purposes and not by you during your off time.
4. Home office costs and utilities
A home office is one of the most common (and sometimes the most profitable) fitness instructor tax deductions.
You must follow several IRS guidelines you must follow to claim this deduction, including regular and exclusive use of the office space. However, deductible home office expenses may include partial rent or mortgage interest, insurance, repairs and depreciation.
Similarly, you may also be able to claim a portion of your monthly utility bills, cell phone bill and more. If you’re in a commercial space that requires commercial property insurance, then you can claim these expenses as well.
5. Legal fees related to your business
Certain legal fees are deductible. For example, the costs of filing personal trainer legal forms or having an attorney draft a letter for you. Legal fees that are directly business-related expenses are generally tax-deductible.
Personal legal fees, such as the cost of drawing up a will, generally are not.
6. Marketing expenses
Personal trainer marketing comes in many forms, from branded clothing to business cards, flyers and paid social media ads. If you pay website domain fees, have a logo created or hire a photographer for promotional shots, it all counts as long as it’s a legitimate business expense.
While marketing and advertising expenses are generally tax-deductible, costs related to lobbying (trying to influence legislation) are not.
7. Travel costs
Travel costs are generally tax-deductible if they’re necessary for your fitness business, such as a trade show or conference. Or maybe a celebrity client wants you to travel with them when they go on a trip.
Whatever the case, you will need to separately account for your transportation, lodging, meals and incidentals using one of the IRS-approved methods. There are also a variety of IRS guidelines and regulations surrounding travel deductions, some of which are quite complex.
In addition, you can generally deduct some or all miscellaneous business expenses from your self-employment taxes. These may include:
- Office supplies such as printer ink cartridges, paper and a water cooler.
- Classes you take to improve or maintain your personal trainer skills.
- Your business license fees.
- Facility rental fees.
- Subscriptions to trade magazines and publications.
Special guidelines may apply to depreciable property, such as computers and office furniture.
How to claim personal trainer tax deductions
When claiming personal trainer tax deductions, the IRS looks for two things from tax payers:
- Can you prove you incurred the expense?
- Was the expense an ordinary and necessary cost of doing business?
Prove you incurred the expenses
- Receipts: Although receipts are not always required for certain small purchases, it’s best to save and file all receipts for bookkeeping.
- Car expenses: You must keep a mileage log for your business use of the vehicle to claim a deduction for car expenses based on mileage.
- Home office deduction: you’ll need to know the square footage of your house and the square footage of the space you use exclusively as a workspace.
- Insurance: Don’t forget to include annual and recurring expenses like insurance.
As a self-employed sole proprietor, you would use Schedule C (Form 1040) to list your income and deductions.
If you choose to file your taxes through a tax software solution such as TurboTax or TaxAct, the software will walk you through the process. It will help you understand each deduction and the rules for claiming it.
However, if you aren’t financially or technologically savvy, or it’s your first year in business or your tax situation is complicated, it may be better to use a tax professional to handle your personal trainer tax return. Even if you use a software solution, it’s a good idea to have a CPA or tax attorney look over your financial records once a year.
