The answer to this question depends on the type of club and whether its purpose is a business one. If it does, you can deduct your club dues on your business tax return. However, if the club is operated for social or recreational purposes, you can’t deduct your club dues.
Are initiation fees and special assessments subject to dues tax?
Generally, initiation fees and special assessments are not taxable. Initiation fees are charges that entitle members to membership in the club, and special assessments are amounts that are imposed on prospective or current members as part of a condition of their membership. In addition, a club can charge a fee to a member to reimburse the club for the costs of operating a facility or using a service.
Are charges to a club member for food and beverages taxable?
A club may require its members to pay a certain amount of money for food and beverages during a specified period, usually monthly or quarterly. Amounts that the members actually spend on food and beverages are subject to sales and use tax, not dues tax.
Are charges to a club members as reimbursement for the cost of operating the facility taxable?
A fee charged to a club members to reimburse the club for the costs of operating its facilities is taxable. A yacht club, for example, charges a fee to its members to cover the costs of renting a boat slip, which includes paying sales tax on the rental.
Are club fees for membership applications subject to dues tax?
Unless the amount is exempt under special assessment rules, fees imposed to a prospective or current member to apply for membership in a social, athletic, or sporting club are subject to dues tax. Examples of these types of fees include application fees, initiation fees, annual membership fees, and special assessment fees.
Are club charges for a special project taxable?
Amounts a club receives from members for a special assessment must be expended within three years of receipt to qualify for the exclusion from dues tax. This rule does not mean that the project for which the special assessment was imposed must be completed within three years, only that the club must spend each payment of the assessment within three years.
What Are Other Clubs That Are Not Subject to Dues Tax?
A club is not subject to dues tax if it is an organization operated for the benefit of the community, such as a civic or public service group. For instance, Rotary and Lions clubs can be deducted as long as their main purpose is not to provide social or entertainment activities.
What Are Clubs That Are Not Social, Athletic or Sporting?
Other than lawn bowling clubs, clubs that are not social, athletic or sporting are not subject to dues tax. Examples of other county clubs that are not social, athletic or sporting clubs include fraternal, professional, and real estate organizations.
Sign in to leave a comment.