The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes (filed in 2020) and 2018 taxes, which should be filed by the April 15th, 2019 (or October 2019 with filed extension) deadline.
When it comes to staying fit, personal trainers can often keep you motivated along your workout journey. If you’re a self-employed personal trainer, your forte is probably in fitness, not taxes. But, did you know there are a lot of business tax deductions you can take as a self-employed personal trainer to reduce your taxes so you can stay financially fit?
As a self-employed trainer, versus one on salary at a gym, you’re an independent contractor and thus eligible for many tax deductions…even if you don’t itemize your tax deductions on your tax return! And because your expenses will reduce your self-employment income, they will also reduce the amount of that income that is subject to the 15.3% self-employment tax (FICA).
Here are a few of the self-employed business tax deductions that will help you lower your taxes and save for your business.
If you just started your self-employed business as a personal trainer, congratulations! Don’t forget that you can deduct your start-up costs, like marketing, website creation, advertising expenses, and costs to scope out your business location.
Fitness Equipment and Training Tools
If you purchased any fitness equipment or training tools during the current tax year, you may get a nice tax break. For example, if you purchase fitness equipment that will be used by your clients, you can take the cost of that equipment as an expense. It doesn’t matter if it’s equipment purchased to use in a gym, in your home business location, or in a client’s home. As long as it will be used for business purposes, you can deduct the purchase price as a business expense.
You may be able to write off the full cost of the equipment and tools. The deduction amount is increased to $1,000,000 beginning with tax year 2018 under the new tax law. You can also write off the cost of any repairs to the equipment and the cost of insurance to cover it.
Training and Educational Materials
This actually works in two directions. Not only can you deduct training and educational materials for your clients as an expense, but you can do the same with similar expenses for yourself. For example, let’s say that you have to take training courses in connection with your work as a personal trainer. The cost of those courses could be tax deductible. But if you also have training videos or apps that you provide for your clients, you may be able to deduct those as well.
You can also deduct continuing education in connection with maintaining your profession and material, such as educational material in connection with nutrition or general health topics that you provide for your clients.
Auto and Travel Expenses
When you travel to meet with clients, you can deduct costs related to that travel. For example, if you drive to a client’s home, the IRS allows you to take the standard mileage deduction at 58 cents per mile in 2019 (54.5 cents for 2018). Regularly driving to your clients’ homes can be a substantial expense. In addition, you may also be able to deduct the amount that you pay for tolls and parking.
Air travel you pay to fly to a client’s location or to take personal training courses can be tax deductible, along with hotel accommodations while you are away. You may also be able to deduct up to 50% of the cost of your meals while you travel.
If you use your car to drive and train clients, you may be able to take the depreciation deduction on your car. Under the new tax reform law, the depreciation deduction amounts have increased compared to the old law, meaning you may see a bigger tax deduction for your car.
Computer and Related Material
Many self-employed individuals have computer-related expenses. This can include the cost of a computer itself, but also any other related expenses, such as the cost of your internet connection and applications that you use related to your business.
If you have a website that is related to your personal training business, expenses that you incur in connection with that site would be tax deductible. This can include web hosting fees and the cost of any third-party services, such as web design or SEO management.
General Business Expenses
There are also certain expenses that are common to nearly all self-employed people that could be tax deductible. This can include your telephone service if you have a dedicated phone line for your business and even office space in your home dedicated to your work.
State business license costs are also tax deductible, as are any dues or subscriptions that you need to maintain your business. You can also deduct the cost of paying for tax preparation and bookkeeping software, or at least the portion of the fee that can be attributed to the business part of your tax return.
If you have a bank account that you use primarily for business, the bank charges that you pay on that account will be tax deductible. This will also be the case if you have a credit card account, where you pay fees in order to accept credit card payments from your clients.
Health Insurance and Retirement Expenses
If you are fully self-employed as a personal trainer, it is likely that you have private health insurance. As a self-employed person, you can deduct the cost of that premium on your tax return. You can also deduct the cost of any private disability insurance that you are paying.
Still another major tax deduction for the self-employed are retirement plan contributions. At a minimum, you can make tax-deductible contributions to your own IRA account. As your income increases, you can consider setting up more specific self-employed retirement plans such as a SEP IRA, which provides even more generous tax deductions.
New 20% Qualified Business Income Deduction
You may be able to receive a 20% Qualified Business Income (QBI) deduction for self-employed under the new tax reform law. The tax deduction is subject to a few limitations based on the type of income, trade, or business you are in, and the amount of net income you earn.
In truth, so many expenses that you incur in connection with your personal training activities are likely to be tax-deductible and can contribute to the health and wellness of your business.
Don’t worry about knowing these tax laws or tracking your business income and expenses. You can use QuickBooks Self-Employed to easily track your income, expenses, mileage, capture your receipts, and estimate your quarterly taxes year-round. Your information can then be easily exported to TurboTax Self-Employed at tax-time.
If you have questions, you can connect live via one-way video to a TurboTax Live Self-Employed CPA or Enrolled Agent and get your tax questions answered. TurboTax Live Self-Employed CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.