@MarilynG1 wrote:
Your employer doesn't have to include reimbursement to you for your gym membership on your W-2 if they use an 'accountable plan'.
For that to be true, the gym membership must be considered an "ordinary and necessary" business expense for the employer, and not merely a fringe benefit. Ordinary and necessary does not mean "essential" but it must be part of the recognized cost of doing that kind of business . For example, even though good employee health is generally desirable, employee gym memberships would not be "ordinary and necessary" expenses for a software company, a government agency, or a grocery store.
Otherwise, the value of employee fringe benefits must be included in their taxable wages unless the benefit falls into specific categories allowed by tax law, like employee health insurance premiums. (Again by way of example, if your employer pays for your gym membership, or pays you an incentive to complete a health assessment or join weight watchers, those payments are taxable income.)
Since the employer will be making the payment taxable in 2020, I am assuming they decided it was not an ordinary and necessary business expense, and that they are correcting their past mistake in paying for a fringe benefit tax-free.
Although I suppose for some businesses (personal trainers?) a gym membership would be an ordinary and necessary business expenses.
Bottom line: if this is a fringe benefit, it's taxable. If it is an ordinary and necessary business expense for the employer, they can reimburse you tax-free.
