Convenience Of Employer Test

AAA

DEFINITION of 'Convenience Of Employer Test'

The test that is applied to determine whether meals, lodging, transportation or other work-related expenses furnished by an employer for employees are taxable. The convenience of employer test mandates that any employee expenses paid for by the employer must be solely for the convenience of the employer, and must be incurred on the employer's premises if applicable. If this is the case, then those expenses are not included in the employee's income.

INVESTOPEDIA EXPLAINS 'Convenience Of Employer Test'

The convenience of employer test applies both to the taxability of expenses paid by the employer and the deductibility of unreimbursed expenses borne by employees. In the latter case, the bottom line is usually when the employer does not furnish the equipment or tools necessary for the employee to do the job. If the employee is paying these expenses and the expenses pass the convenience of employer test, then they may be deductible subject to certain limitations.

RELATED TERMS
  1. Convention Expenses

    Any travel expenses incurred while at a business convention. ...
  2. Business

    1. An organization or enterprising entity engaged in commercial, ...
  3. Accountable Plan

    A plan for reimbursing employees for business expenses. Under ...
  4. Travel Expenses

    The costs associated with traveling for the purpose of conducting ...
  5. Operating Cost

    Expenses associated with administering a business on a day to ...
  6. Authorization Only

    A type of sale transaction that creates a pending transaction ...
RELATED FAQS
  1. What are some commonly missed deductions for business owners?

    If you own a business, you are eligible to deduct certain business-related expenses. These include deductions for the following: Home ... Read Full Answer >>
  2. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  3. Will a hike in the minimum wage result in deadweight loss to businesses and labor?

    There have been studies which show that hikes in minimum wage create deadweight loss to business and labor. It is possible ... Read Full Answer >>
  4. When does Q4 start and finish?

    Most companies such as Facebook have financial years that end on December 31st. For these companies, the fourth quarter begins ... Read Full Answer >>
  5. What does a merger or acquisition mean for the target company's employees?

    Suppose one sporting goods manufacturer merges with or acquires another sporting goods manufacturer. Before the merger and ... Read Full Answer >>
  6. Does technology follow the law of diminishing marginal returns?

    The law of diminishing marginal returns does sometimes apply to the technology industry. The law states that as employee ... Read Full Answer >>
Related Articles
  1. Taxes

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  2. Retirement

    Avoid An Audit: 6 "Red Flags" You Should Know

    Don't make yourself a target - steer clear of these attention-grabbing tax-filing practices.
  3. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.
  4. Economics

    What is Involved in Inventory Management?

    Inventory management refers to the theories, functions and management skills involved in controlling an inventory.
  5. Economics

    What Does Accretive Mean?

    In the business world, accretive most often to refers to additional growth from outside sources.
  6. Economics

    Explaining Prime Cost

    Prime cost is a way of measuring the total cost of the production inputs needed to create a given output.
  7. Personal Finance

    Protect Your Teen When They Work Over The Summer

    If your child is working a summer job, here are some rules you should know about what he or she is allowed to do.
  8. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  9. Retirement

    Why Working Longer To Save More Is A Bad Strategy

    If your retirement plan mostly consists of working longer to earn and save more money, you might need to rethink that strategy.
  10. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center