Tripped Up on Travelers Checks

QUESTION: My husband and I always buy travelers checks for vacations because we thought our money would be protected regardless of how or why the checks were lost or stolen. But when someone stole $100 worth of our travelers checks recently and we tried to collect our money, American Express refused to pay. Their reason was that the checks were cashed by the time we reported the loss. I can't believe that's really a legitimate reason for denying responsibility. If that's what happens, why are travelers checks any safer to carry than cash?--E.P.S.

ANSWER: If you properly signed the travelers checks and reported the loss promptly, your request for reimbursement should not have been denied.

However, American Express and other issuers of travelers checks do have rather lengthy lists of reasons for refusing to reimburse a check holder whose checks have been lost or stolen. If, for example, they bore either no signature or two signatures, they were no different than cash and you would be very hard-pressed to make a successful argument for reimbursement.

When you received your travelers checks, you should have received some written instructions. The checks are supposed to be signed immediately in the upper left-hand corner and not countersigned at the bottom until they are cashed. Also, you are supposed to keep a record of their serial numbers.

If you followed all of those instructions and called the American Express office promptly upon learning of the theft, you should have been repaid--regardless of whether the thief signed and cashed them before your report was made.

The reimbursement should have been fast, too. American Express prides itself on refunding owners of lost checks within seven minutes of the reported loss. They will even promise to hand deliver new checks within three hours of the report.

However, if you failed to sign them at the top, or if you signed them not only at the top but also at the bottom, American Express is under no obligation to reimburse you. In either case, the travelers checks are just like cash. Anyone could sign, countersign and cash them without being suspect.

Problems getting a refund also can arise if the owner has difficulty relating how they were lost, waits several weeks to report the loss, does not have proper identification or has neither the serial numbers nor information on where and when the checks were purchased. In each case, the owner may eventually be reimbursed. But he or she should expect a long wait.

Q: I am thinking about buying a home computer, mostly so I can leave the office before the rush-hour traffic hits, spend more time with my new baby and still get my work done. My employer has agreed to this arrangement but won't help pay for the computer. Is this an expense I can claim as a tax deduction? Years ago I wouldn't even have asked. But I thought I read somewhere recently that the IRS is rejecting such claims.--F.N.B.

A: You're right to be cautious. It isn't at all certain any longer that the Internal Revenue Service would allow this as a deduction. Because this is an area of widespread abuse, you can at least expect the agency to take a hard look at the deduction. In other words, don't be surprised to be audited if you buy the computer and claim it as a deductible business expense.

It is no longer good enough that your employer approves of the purchase and the work arrangement. Even when the employer encourages the purchase and use of a home computer, there is still no assurance that the deduction will be allowed. In fact, there have been cases in the past couple of years in which the employer's support was so strong that he provided some of the money for the computer or the peripheral equipment, such as a modem, and the IRS still disallowed the deduction.

How does one ensure that such a deduction will be allowed? You must either demonstrate that you needed to buy it for a separate business of your own or prove that you are required to use the computer to properly perform your job. How to successfully argue the latter is nebulous. But you might have your employer write into your job description that you are required to use a personal computer away from the office. Then he should keep a log--as should you--of your work on that home computer.

Debra Whitefield cannot answer mail individually but will respond in this column to financial questions of general interest. Do not telephone. Write to Money Talk, The Los Angeles Times, 780 Third Ave., Suite 3801, New York, N.Y. 10017.

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