When it comes to staying fit, personal trainers can often keep you motivated to 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 use to reduce your tax liability 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 return! And because the expenses will reduce your gross business income, it will also reduce the amount of that income that is subject to the 15.3% self-employment tax (FICA).
Here are some of the business tax deductions that will help you lower your taxes and save for your business.
If you just started your business as a personal trainer, congratulations! Don’t forget that you can deduct your start-up costs, like marketing and 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 a tax deduction. It doesn’t matter if it’s equipment purchased to use in a gym, in your home 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 up to $510,000 in 2017, and that deduction amount is increased to $1,000,000 in 2018 under the new tax reform law. You can also write off the cost of any repairs to that 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 expense those as well.
You can also take deductions for 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 expense 54.5 cents per mile 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 for to fly to a client location, or to take personal training courses, can be tax deductible, as well as hotel accommodations while you are away. You may also be able to deduct up to 50% of the cost of your meals while you are away.
If you use your car to drive and train clients, you may also be able to deduct the depreciation on your car. Under the new tax reform law, the depreciation deduction amounts have increased compared to under the old law, meaning you may see a bigger tax deduction for your car.
Computer and Related Material
If you’re like just about anyone who is in business, you may 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 any 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 pay. 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 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 income 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 fully 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% Deduction on Qualified Business Income
You may be able to receive a 20% qualified business income deduction for self-employed under the new tax reform law. The 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 and tracking your business 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 CPA or Enrolled Agent and get your tax questions answered at tax-time. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your tax return.