Convenience of Employer Test is a test carried out to determine if the incentives provided to the employee by the employer like meals, transportation, lodgings etc are taxable. According to the convenience of employer test, the expenses for the employee that is paid by the employer must be solely done for the convenience of the employer. In this case these expenses will not be included in the employee’s income.
The convenience of employer test is applicable to both taxation of the expenses that are paid by the employer and the deduction of the expenses borne by the employee that are unreimbursed.
For example if the employer is unable to provide the employee with the equipments or tools necessary for the employee to do his job the expenses is paid by the employee. If these expenses pass the convenience of employer test then these expenses will be deductible by the employee.
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