Tax credit

"Chris Ruehrwein" wrote

No tax credits per se. The costs of operating them are deductible by the business of course.

The value of using the fitness center is not income to the employee because it's a tax-free fringe benefit if certain conditions are met. Namely all employees, their spouses and children must be allowed to use the facility, and the general public can not. Other restrictions are in place. See Regulation 1.132-1(e).

If you're talking serious bucks here, and not a bow-flex for the corner of the break room, talk to your corporate accountant about this, who gets to use it, when, and how the expenses are deducted (equipment would be depreciated).

There might be tax credits from the city, though I doubt it, so better check there as well.

At my company, the spouse can use the gym, but they have to pay an additional fee. It's free for employees.

Is it really a requirement that spouses and children be permitted to use the facility?

That seems to imply that use by spouses and children is not prohibited by the IRS.

Seth

Page 7 of IRS Pub 15b, says:

Athletic Facilities

You can exclude the value of an employees use of an on-premises gym or other athletic facility you operate from an employees wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. For this purpose, an employees dependent child is a child or stepchild who is the employees dependent or who, if both parents are deceased, has not attained the age of 25.

That would seem to agree with my position: there's no requirement that spouses or children be permitted, but rather a statement that the IRS won't disqualify a deduction if they are.

Seth

"Seth" wrote

You read correctly.

What you have to do though, is make sure that the rule the company puts in place is the same for every employee. So the owner's wife or kid can't be pumping iron while the janitor's wife is locked out.