Taxes for Functional Fitness Coaches

The gym is a great place to escape and manage stress, especially if you can make gym time a full-time gig—and while bench presses and free weights can’t save you from having to file your taxes, the good news is that we can simplify the process.

For functional fitness coaches, understanding your taxes starts not with how you teach, but how you work. Depending on several different factors, you’ll either be considered an employee or a subcontractor.

Taxes work a little differently for each of these situations, so let’s break them down one at a time.

How taxes work for coaches who are employees?

Employees work for another person or company for wages or a salary, and when it comes to taxes, employees have the simplest process.

The employer (the gym, owner, etc.) is required to withhold taxes from your paychecks to fulfill your tax obligation—you may remember filling out a Form W-4 when you were hired, which tells your employer how much to withhold. Come tax time, your gym will send a Form W-2, which helps you fill out income and withholding information on your tax return.

Unfortunately, employees can’t deduct unreimbursed work expenses like uniforms and equipment; those out-of-pocket expenses are yours to handle.

What about taxes for fitness coaches who are subcontractors?

Subcontractors are different from employees in that the gym or fitness center doesn’t withhold taxes. You’re responsible to pay quarterly estimated taxes on whatever you earn.

When it’s time to file your taxes, your return will be a bit more involved—but you also have greater opportunity to lower your tax bill. You’ll get a Form 1099-NEC instead of a Form W-2, and it will list income details as “non-employee compensation.” Form 1099-NEC will only show what you were paid, not how much you paid in taxes throughout the year—you’ll have to keep your own records of that and report your taxes paid on Schedule 3.

Independent contractors can deduct work-related expenses from income, which will help reduce your tax bill:

• Health and liability insurance
• Gym membership fees
• Exercise and workout equipment
• Diagnostic tools that measure weight, muscle, fat, endurance, and so on

Remember that you can’t deduct expenses that the gym reimbursed you for, however. You can only deduct what you paid for out of pocket.

You’ll also owe self-employment (SE) tax if you make more than $400 during the year—but you can deduct half of your SE tax as an above-the-line deduction on Form 1040, Schedule 1.

Keep good records and receipts of all your income and expenses to back up what you report on your taxes. When it’s time to file, include all your income and expense information on Schedule C.

Are you an employee or subcontractor? It comes down to three different types of control

Behavioral control. Behavior here means how the job gets done. Who sets the time you show up to coach? Who designs the workouts? Who gets the final say on your weekly schedule? The more control you have, the closer you’ll be to a subcontractor. The more control your boss (the gym, owners, etc.) has, the more likely you’ll be categorized as an employee.

Note that, if you have the right to set your own schedules and workouts but still use the ones provided, you technically have more control and would be more likely classified as a subcontractor.

Financial control. Financial control doesn’t just have to do with how much you get paid—it also comes down to economic opportunities and risks. If the business fails, how much of a loss would you take personally? If you want to invest in new equipment, who gets more say in how the money is spent? And are you using the gym’s budget or your own?

Working relationship with boss. How do you and your boss manage your working relationship? We’re not talking friendliness here (hopefully, that’s a factor in either case!). Things like workplace benefits lean heavily towards being an employee, though the absence of benefits doesn’t really differentiate between employee and subcontractor.

Did you sign a contract when you began work? The way that contract is constructed can be used to support either subcontractor or employee status, since it indicates intention at hiring—but it’s not foolproof. If your boss says in the contract that you’re a subcontractor, but controls your behavior and finances, the IRS has the right to call your employment what it is.

Want a second opinion? Use the IRS’s Form SS-8 to have them check out your situation

If you’re head’s spinning and the fear of an audit is peaking out your anxiety, here’s some good news. The IRS has a form to help you determine your tax situation before you cross your fingers and file taxes. It’s called Form SS-8, and it’s basically peace of mind in a PDF.

Remember: Determining your status as an employee or subcontractor is ultimately the IRS’s call. Even if your boss says you’re one or the other and treats your payment accordingly, the IRS has the right to override that definition based on how your job actually operates and who has the control we mentioned earlier.

It’s your responsibility to file and pay your own taxes, so if you want a second look, be sure to file Form SS-8.

Whatever your situation, 1040.com makes taxes easy

Functional fitness coaches are no strangers to the grind, but we’re here so you can save it for the gym. Filing your taxes with 1040.com should be the easiest part of your day, even for independent contractors and self-employed trainers. If you get stuck, reach out to our support team. We’re always happy to help!