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This content was updated in February 2018 and reviewed by Julie Kostelecky, CPA, CVA of Rudd and Company.
If you’re an independent contractor or business owner you have to file your own taxes, which seems like a negative until you consider the major positive…deductions! When you make a purchase for your business, it can usually be subtracted from the total amount of income you earned, meaning it isn’t taxed.
This is an average of 20% savings for you give or take. Who doesn’t love a 20% off coupon!? There are of course rules involved to get this benefit, learn about some of them in this article.
And realize, employees are not eligible for tax write-offs anymore with the new tax law. You know you’re an employee if you filled out a W-4 Form and taxes are taken automatically from your paycheck. This is usually the case for group fitness instructors. You can only deduct expenses for the jobs you do that you file your own taxes for.
How to Save $1,000 in Taxes
Say you earned $30,000 as a personal trainer (non-employee wages) and your tax bracket is 20%, then your taxes are:
$30,000 x 0.2 = $6,000
This number can be reduced significantly by reporting business expense deductions….
Say you spent $5,000 on education, marketing, travel, etc. Now your income is $25,000 for the year and your taxes are:
$25,000 x 0.2 = $5,000
$1,000 savings! All that extra money in exchange for you getting organized and keeping records. I’d say it’s well worth your while.
If I lost you in the numbers, stay focused on the $1,000 savings and consider hiring an accountant. You’ll almost definitely pay off their services with the money you save.
Personal Trainer Tax Deductions That Add Up
If you want to deduct business expenses from your income you need to keep a record of your spending. You can save paper and digital receipts separately (paper in a folder and digital on the computer) or combine them into one place. You can also use an application on your smartphone.
1. Print all online receipts to place in a physical folder.
2. Scan paper receipts to save to your computer.
3. Photograph and save all receipts into your smartphone.
It’s up to you, just make sure you have a record to prove to the IRS in case you’re audited (this is when they check up on your math). Then, create a spreadsheet to keep track of the total expenses for each category (see below) or use a program like Quickbooks.
Every business situation is different, but here are the most common areas that personal trainers deduct expenses for.
Home Office – This needs to be a designated room in your home with four walls. You take the square footage of that space divided by the total space of your home/apartment to figure out how much of your rent or mortgage interest is deductible.
For example: If your desk space or office is 200 square feet and your home is 1,300 square feet then 200/1300 = 0.15. 15% of your home is being used for business. Or you can deduct $5/ square foot as an alternative.
Driving/Mileage – This usually needs to be travel from a home office or from your gym to a client’s home to qualify. Keep track of miles driven and/or automobile expenses for this deduction.
Here’s an article with more details: Tracking Mileage for Personal Trainer Tax Deductions. The example shows you how to save $2,750. It’s worth the 5 minutes of reading!
Marketing – Website fees, business cards, magazine advertisements, fliers, etc. Anything you spend money on to promote your business qualifies to be a business expense.
Education – Fitness conventions, continuing education courses (online or in person), books, audios, etc. Anything you purchase to further your knowledge that’s business related can qualify for a deduction. If you pay a mentor or spend money to be in a mastermind group, this probably qualifies too.
Meals – Eating out with a colleague or a client can qualify. So can meals purchased when traveling for work, say to a fitness conference. You can only deduct 50%, but it’s still something!
Other Purchases – The sky is the limit, but make sure the items are business related and check with a local accountant to make sure you’re within legal limits.
- Music for teaching group fitness can qualify if you’re not an employee.
- Equipment you bought for a private group fitness class you teach or to use in clients homes/at a gym you’re contracted with.
- Your work attire could qualify if it has your business logo on it. I’ve heard different rules about this.
- Health Insurance can be deducted in some cases. Expenses from a Health Savings Account (HSA) may qualify.
- Money that you pay your kids to help with business tasks can qualify. Just be sure to pay payroll taxes if you are required to.
- Your business tax license, personal training insurance, and money spent on an accountant all usually qualify as deductions.
- Retirement Plans (SEP, IRA) are a bonus method to save on taxes and plan for a financial future. Even if you’re barely making ends meat, this is something to consider. As little as $100/month can add up over time.
Are you filing your own taxes this year? John Rutnik, CPT says, “See your accountant or bookkeeper before the end of the year. He or she will often advise you to make purchases or other strategies to increase your write-offs. If you wait till tax time it’s too late the year is already closed out.”
**This information is educational and not meant to replace advice from an accountant. Seek professional counsel before deducting money on your tax return. And refer to the IRS website for more details.
References and Resources
Tax Planning for Personal Trainers: Getting Organized
Tax Planning for Personal Trainers: Estimated Payments
Tax Deductions for Personal Trainers