Incidental expenses are minor expenditures associated with business travel. These expenses comprise an immaterial part of the travel and entertainment costs that a person might incur. Examples of these expenses are baggage handler tips and room service tips. These expenditures are frequently paid out in cash, since they are so small.
When applying for the reimbursement of incidental expenses with an expense report, employees may not be required to include any receipts, given the minimal amounts involved and the difficulty of obtaining receipts.
A number of expenditures related to travel are allocated elsewhere, rather than being classified as incidental. For example, the cost of phone calls is charged to the phone or utilities expense, while the costs of clothes cleaning and pressing are considered a cost of travel. Similarly, the cost to mail an expense report to the accounting department is considered a postage cost, while the cost of a taxi is considered a travel cost. Personal expenses are not considered incidental expenses.
The IRS allows a deduction of $5 per day for incidental expenses while traveling, which gives an indication of the extremely small size of this type of expenditure.
Given their small size, a business does not usually bother to budget for incidental expenses. They might instead be lumped into a larger "other expenses" projection.
There is a risk of minor fraud in this area, since canny employees understand that their charges are quite unlikely to be inspected. Consequently, they may claim a modest amount on their expense reports that never actually occurred.
Incidental expenses are also called incidentals.