The Tax Treatment of Country Club Dues

Can you deduct your country club dues? What constitutes legitimate business deductions?

You may use your country club primarily for business purposes, but the tax laws don't let you deduct any portion of the annual dues. Even if your employer pays these dues, you may have to include this amount in your taxable compensation, reported in your W-2. But don't overlook related write-offs and planning opportunities.

You can deduct other business-related club expenses. Entertainment expenses are at least partially deductible if they follow or precede a substantial business discussion. For example, let's say you meet with a client in the morning, and in the afternoon the play golf together and have dinner at the club. You can deduct part of the greens fees and meal expense. You will want to keep track of the business versus personal use of the club to account for the dues if your employer pays them. Why? Read on!

Even though a portion of dues paid by your employer will be taxable to you as compensation, the percentage of dues attributed to business is not. That business portion is accounted for by the company as a "working condition fringe benefit," still not deductible by the company, but not taxable to you as wages either. So if the annual club dues are $20,000 and you can substantiate business use of 60 percent, $12,000 is excluded from income, and only $8,000 winds up in your W-2. Figure that your only personal cost is the income tax on $8,000, and the recordkeeping is worth it.

We can help you calculate the best way to handle country club expenses and document them for the IRS. Just call for an appointment.