Can I Deduct My Gym Membership (as a Business Owner)?

Is there any way to make a gym membership deductible to the business when the sole employee is the owner?

The first problem we run into is Section 162 – which states that for something to be deductible to a business it must be both ordinary and necessary.

For the vast majority of industries, a gym membership would not qualify as ordinary and necessary to running the business.  

That means the membership would fall under a taxable fringe benefit – which means it’s deductible to the business owner, but it’s includable in the payroll of the employee. If you’re the owner and the employee, you’re just shifting income from the business to yourself personally, and having to pay employment taxes plus payroll taxes on the additional income.

So, not the greatest tax strategy.  

The last option is to have a gym on-premise of the office.

This becomes a non-taxable fringe benefit to the employee, while still being deductible by the employer. But – the chances of this passing the audit when the sole employee is the same person as the business person, is next to nil because of Section 262, which states that personal expenses are never deductible.

You’d be very hard-pressed to prove that as both the employer and sole-employee, the in-office gym didn’t have personal benefit.