Q&A

Deductible moving expenses Q In 1983, the company my husband works for transferred us to a new location. How do we decide which expenses are employee business expenses and which are moving expenses? Many were repaid, but not all. - H. M.

Any expenses that you incur as a result of moving are counted as moving expenses, not employee business expenses, says John Kearney, tax manager at Coopers & Lybrand, the accounting firm. There can be some confusion on this, Kearney says, because employees sometimes turn in the same forms for business expenses as they do for employee expenses. But if the money you spend was related to the move and was not reimbursed, it counts as moving expense. These expenses include such things as transportation, food, and lodging on the road as well as temporary lodging at the new location, the cost of moving household goods, and expenses of selling and purchasing a residence, breaking a lease, or obtaining a lease on a permanent residence. Tax break on gift to minors

Q In the Unified Gift to Minors Act, is there a tax benefit to the giver? If so, how? One must still report the money as income before it is given away, don't they? - M. H. The tax benefit to the giver is simply a matter of reducing the amount of money the giver has that can earn taxable income. For example, Coopers & Lybrand's Kearney says, if a parent has $10,000 in investments, the profits on that investment are taxed at the parent's rate. But that same $10,000 in investments in a child's name is taxed at the child's lower rate. And yes, as long as the money is in the parent's name, they must report any proceeds from it as income. No penalty on IRA transfer Q If I open an individual retirement account (IRA), and then find a better deal somewhere else, how can I move the money to a new account if it can't be touched until age 591/2? - R. A. You can temporarily withdraw all or part of the money in your IRA any time without penalty, if you find a better IRA program somewhere else. But you have to put the money back into another IRA within 60 days, or you pay a penalty of 10 percent of the money withdrawn, plus having it taxed as ordinary income. If you do make a temporary withdrawal, you have to wait 12 months before doing it again. Also, if you earn any interest or dividends in the time it takes to find another IRA, they must be included in your gross income for that year. Quick life insurance Q What is the best way to buy life insurance, if you don't have the time to compare prices and companies? - B. T. Probably the fastest way to do this is to buy one-year renewable term insurance. There is a wide range of prices for the same basic product: one year's insurance coverage on your life. Once you have the term policy, you can take the time to investigate other insurance alternatives, such as whole life, universal life, variable life, or even staying with your one-year term. Although the premiums on term insurance go up every year, it is often the cheapest insurance alternative. Getting term insurance is not difficult. Simply call some insurance companies, tell them how much coverage you want ($100,000 is the most common and the most efficiently priced) your age, sex, and whether you want the smoker or nonsmoker policy. (If the company does not have nonsmoker discounts, call someone else). The agent will send you a schedule that includes the first year's premium and expected future premiums. Writing off home-building costs Q I recently built a new home. In addition to construction costs, I had these expenses: loan fee, mortgage application fee, inspection, title record. Can you tell me which of these expenses is tax deductible and over what period of time?WS- J. R. The only one of these expenses that would be deductible is the loan fee, also known as the loan origination fee, or ''points.'' Each point represents 1 percent of the mortgage and as long as the number of points charged by your lender is in line with other lenders in the area, the expense is deductible. As for the others, they are all counted as adjustments to the basis of the porperty. In other words, you can recoup them when you sell the house later. So they are not deductible.