I always laugh when I stumble across so-called “tax gurus” on the internet.
Not only do they dole out blatantly false information about 90% of the time.
But they do it happily, somehow believing everything they’re saying is objectively true.
And when you’re an actual tax professional who, you know, does actual taxes for a living, these guru types are the stuff of nightmares.
Because after legions of unsuspecting small business owners (most of whom don’t know a deduction from a tax credit) take whatever random TikTok tax advice they find, they get burned. Sometimes badly. And they come to professionals like me to help clean up their financial mess so they can get right with the IRS.
This brings me to this month’s topic: your gym membership.
Can you deduct it?
Lots of TikTok tax folks think so.
But is it a legit write-off, or are these tax influencers suffering from wishful thinking?
Keep reading to find out!
But First – What’s a Tax Deduction?
This question might seem silly if you’ve been hanging around these waters for a while. But you wouldn’t believe the number of business owners who can’t offer a clear definition. So just in case you’re not sure, here it is: a tax deduction is a provision that reduces your income before you calculate the taxes you owe to the IRS.
What Makes Someone Eligible for a Tax Deduction?
Different tax deductions have different standards for eligibility.
Take medical and dental care, for example. To be eligible for this individual deduction, your total expenses in this category, including you, your spouse, and any dependents, must exceed 7.5% of your adjusted gross income.
Once you’ve reached that threshold, you can deduct any amount spent beyond 7.5%.
Determining eligibility for individual deductions is pretty straightforward. The IRS has a simple guide explaining various credits, deductions, and eligibility requirements.
Business Deduction Eligibility Can Be Less Clear
Determining whether or not a business expense is tax deductible is more tricky.
Rather than meeting specific economic criteria, many business expense deductions come down to the question of ordinary and necessary.
For an expense to be considered “ordinary,” it must be commonly used in your industry.
For an expense to be considered “necessary,” it must be “necessary and appropriate for your trade or business,” according to IRS.gov.
Sick of your high tax bill? Never miss a deduction again!
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Using Mental Gymnastics to Justify A Lifestyle Expense
The somewhat vague definitions of “ordinary” and “necessary” can open the door to questionable tax practices.
There are plenty of tax professionals out there who will happily find a way to write off your Hawaiian vacation (“business meeting”) or boat (for “entertaining your business clients.”)
But when deductions start crossing the line between professional and lifestyle expenses, business owners should tread lightly. The IRS uses specific criteria to determine eligibility in these circumstances. And should you get audited after claiming questionable expenses, you’ll have to present a lot of evidence supporting your claims.
Can I Deduct My Gym Membership?
It all boils down to whether or not an expense is vital for and directly related to running your business.
Expenses that are maybe sort-of-related-ish don’t count.
For example, say you’re getting Botox because you need to look professional for your clients.
Sorry, but no.
While looking great for your clients is important, the botox is unnecessary for your business’s direct, day-to-day running.
The same logic applies to your gym membership.
Are you a personal trainer? Do you own a gym? Are you a fitness influencer whose job is to be in excellent shape?
If you answered “yes,” then proceed with your deduction. The gym is an actual necessity for running your business.
But if you’re trying to write off your CrossFit costs or your personal trainer’s fees simply because you want to look fab at your next work-related event…it’s a no-go.
Want Expert An Expert Tax Strategy for Your Business? Let Tax-Savvy Jessica Design a Streamlined Tax Savings Plan for You.
I know it’s a hard pill to swallow when you realize self-employment isn’t a tax deduction free-for-all.
But the good news?
Working with a tax strategist will still uncover plenty of deductions you didn’t even know were available.
Tax Savvy Jessica has 13+ years of experience helping her clients navigate taxes for small business owners.
Let us handle the taxes so you can run your business.
Take the Fit + Pricing Quiz to learn more about our services.