We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are out of Pocket Expenses?

Mary McMahon
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Out of pocket expenses are costs that arise in the course of conducting business or personal matters requiring immediate payments in cash, putting a person literally “out of pocket” to cover those expenses. Some of these expenses may be tax-deductible, if they fall into certain categories, and others may be eligible for reimbursement, allowing people to be compensated for the unexpected outlay of cash. Receipts need to be kept in both cases to carefully document the expenses.

Employees conducting business on behalf of an employer may have out of pocket expenses like bridge tolls, lunch for a client, supplies to complete a task, and so forth. As long as the activities of the employee were specifically requested and approved by the employer, the employer may offer reimbursement. In other cases, employees can claim those expenses on a tax return, as they are associated with the cost of handling tasks assigned at work.

Employers with trusted personnel may have other methods of handling out of pocket expenses, such as issuing credit cards or blank checks, or allowing employees to charge expenses to a company account. In other cases, employees must submit documentation of expenses incurred while performing work on behalf of the company so they can be reviewed. If approved, a check will be issued to compensate, or employees will be paid out of a petty cash fund.

Personal out of pocket expenses are sometimes deductible. Out of pocket medical expenses, coverage for costs not addressed by insurance plans, may be deductible. If they are high, they are usually higher than the standard deduction, creating an incentive to itemize on a tax return. Donations to charities are also considered a form of out of pocket expense, as the person is providing cash payments up front.

Payments for goods and services used over a period of time do not qualify. Thus, gas and tolls are out of pocket expenses, but car insurance and registration are not. People using cars for company business can, however, claim mileage to compensate them for wear and tear on the car, along with indirect expenses like insurance. Likewise, health insurance premiums are not out of pocket expenses, but copays at doctor visits would be. Usually, it is easy to determine if an expense qualifies as an out of pocket cost; if it is for a service or good used immediately, rather than an investment in a long term service, it is generally an out of pocket expense.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.