What is the "convenience of employer test"?
(Revised November 2012)

If you are deducting employee business expenses and the IRS questions your deduction, you will need to prove that the expenses were not reimbursable and that they meet the 'convenience of employer' test. Generally, the test is met if the employee cannot properly perform his/her job without otherwise incurring the expense or having the particular property available. While the test sounds easy to meet, the IRS has imposed some very tough requirements in passing it; merely being able to perform a job or activity more efficiently is not enough. Finally, your success or failure in meeting this test could be based upon small variations in the factual situation.

For example, in a private letter ruling (PLR 8725067), the IRS held that a computer analyst who was responsible for maintaining nationally linked computer systems while on 24-hour call and living dozens of miles from the nearest computer site, could not deduct the home computer he needed in case of an emergency. Since the employer provided him with a computer at work, he flunked the convenience of employer test even though his home was located miles from his office. The IRS concluded that while the long distance factor was a major inconvenience, the employee could still do his job. If the employee was prohibited from using his office during certain times (e.g. security or maintenance concerns) the outcome might have been different.

The best situation for meeting this test is where the employer does not provide the tools involved with the activity. The following example from the IRS regulations demonstrates this fact:

Z, which is in the business of providing delivery services, employs B as a courier. Z does not provide delivery vehicles and explicitly requires its couriers to own an automobile or motorcycle for making deliveries. B's use of his personal automobile or motorcycle for making deliveries is for the convenience of Z and is required as a condition of employment.

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