My employer reimburses a part of my gym membership via Expensify, and it's not included on W-2. Should I report it as taxable income separately?

[einholen]

They are going to start including this benefit in W-2 starting 2020, but in 2019 I'm on my own and not sure if I need to pull all these reimbursements and report them. If I do, which IRS form/TurboTax flow do I follow?

[Opus 17]

Legally, yes you should report it.  (Would you get away with it if you forgot about it?  Probably.)

In Turbotax on the Wages and Income page, go to the very bottom for "other uncommon income."  One of the choices should be, I was paid additional wages by my employer that were not on my W-2 but should have been."  You will end up paying 7.65% employee share of medicare and social security tax but not the 15% self-employed version of that tax. 

[MarilynG1]

Your employer doesn't have to include reimbursement to you for your gym membership on your W-2 if they use an 'accountable plan'.

If you submitted a bill from the gym, and were partially reimbursed, you don't need to include this amount in your income.

Click this link for more info on Employer Reimbursements. 

[Anonymous]

you're between a rock and a hard place.  yes, you should report it.  however, reporting it may create problems for your employer.   if the IRS penalizes the employer, can't say how the employer would respond. 

[Opus 17 · Accepted solution]

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@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'.

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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.