A popular incentive for business owners is to provide their employees health club or gym memberships. It is important to note, however, that employers who pay for a fitness program offsite for employees must include that cost as a fringe benefit in the employees’ compensation and report it on their W-2s.
Once the membership fees are included in the employees’ compensation, the employer can then deduct them as compensation. A fitness program that is on site is treated as a non-taxable fringe benefit to the employees so it does not need to be reported on W-2s.
Providing a health club membership is a nice perk for employees and can be a benefit to the company’s bottom line. Please let us know if you have any questions.