1929: America Before the Crash

Economic mayhem. Do you understand what's going on? Most of us don't. And even more disturbing, we fear that those who are supposed to understand do not.

Life savings and retirement plans dropping in value. What's a trillion dollars anyway? Unemployment at 5%. During the Great Depression it was 25%. So it's not so bad now. Right?

What does the viability of an insurance company like AIG have to do with whether I can use my credit card for a cash advance?

Are we really heading toward another Great Crash like the one in 1929?

Well, you know my big push is always toward educating yourself. Learn as much as you can. The best single place to find out what it was like in 1929 and to see what similarities there are to now is to read Warren Sloat’s remarkable book, 1929: America Before the Crash.

The book has a long history. When originally published to critical acclaim in 1979, the Chicago Tribune called it “a powerful and dramatic history of the times” and the New York Times said it had “all the ingredients of a story to match – or outmatch – Watergate.” As its reputation continued to grow, 1929 has recently been republished as a trade paperback. Only recently Newsweek cited the book as an example of how a writer can encapsulate the story of a pivotal year in history.

Sloat takes us up to the Crash. We all attend a party on October 21, 1929 given by Henry Ford in honor of Thomas Edison and the 50 year anniversary of the invention of the lightbulb. The partygoers honoring Edison included President Herbert Hoover, Orville Wright, Madame Marie Curie, John D. Rockefeller, Jr. Enjoying the height of success and prosperity they were blind to the destiny that waited only days hence in the caverns of Wall Street.

Sloat's book is a sweeping narrative that includes portraits of many of the leading figures of the era, from an elderly Thomas Edison to a young Charles Lindbergh, it depicts the US on the brink of disaster. It’s instructive yet fun to read.

By the way -- the author is my husband.

Recently Warren received an email from a 30-something reader. “Your book is filling in all sorts of holes about our current economic and business zeitgeist,” he wrote.

If you're interested in learning more about then, and perhaps now, you can purchase 1929 here.

June Walker
The Author's Wife

File jointly or separately?

Hi June,

I'm a fan of your blog, and have not been able to find an answer to this question.

I'm a graphic designer who has been working as an independent contractor for a small publishing company/printer for almost 4 years. I also do other freelance work from time to time. Until a couple months ago, I also had a part time job as a regular w-2 employee at night, a job I quit after I had a baby in August.

My question is, I just got married in May and my husband has a regular w-2 job. How should we file? jointly or separately? Where would we get our biggest advantage?

Last year I did my own taxes online. I usually owe money, and deduct as many things as I can including home office and mortgage interest, etc. while my husband does a 1040 ez and has been getting a refund. I know one of us will probably get a refund because of the baby too. I'm just not sure who should claim her if we file separately.

confused, Jessica
Winter Park, FL

Dear Confused Jessica,

Without actual numbers there is no way to determine whether filing jointly or separately would be more or less beneficial. Generally it is more beneficial to file jointly.

Every money transaction that ends up on your tax return and to whom that transaction applies impacts your total tax.

Things such as:
** Investment income and which spouse owns the account
** Who owns the house on which you are deducting interest and real estate tax
** How much is student loan interest and who is paying off a student loan
** Who has higher medical expenses, if any
** What are the costs of child care
** How much does each give to charity

Best,
June

Temporary Work Assignment

Brenda from Palatine, IL is an indie who provides organizational development and learning and instructional design consulting. She inquired: "Recently, I have picked up 2 clients in Virginia and DC that have provided me with 1-year contracts, which in essence has required me to stay in the area." "I want to be sure that while I am working for these clients in the area, that my lodging expenses are deductible. My permanent residence is in Illinois."

I have had many questions about the deduction of expenses related to what is known in tax jargon as “temporary assignment" or "temporary worksite.” For instance, if you regularly work at one place -- called your tax home -- and also work at another location, it may not be practical at the end of each work day to return to your tax home from this other location. You may need to "live" at this other location for a while. What is deductible? Here's a guide:

A job assignment may be temporary or indefinite. Which one it is makes a big difference in the amount of expenses you may deduct.

If your other work location qualifies as a temporary work site then you may deduct related travel expenses. And, as you can read here, travel expenses can mount up. A temporary work site or assignment is, generally, work at a single location that is realistically expected to last (and does in fact last) for one year or less.

If, on the other hand, your work assignment or job is indefinite, you cannot deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year.

You must determine whether your assignment is temporary or indefinite when you start work. If you realistically expect an assignment or job to last for one year or less, it is temporary.

An assignment that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.

Be sure to check out the long list of travel expenses on my website.

Reimbursed Expenses Included on a 1099

Hi June,

I just discovered your site today.. am I glad!!

I have been an independent consultant since Oct 2006.

I received a 1099 which includes all my reimbursed expenses. My question has to do with the meals deductions: in using Turbo tax, it appears that only 50% of my meals are deductible. That would mean that 50% of meals becomes ordinary taxable income.

Am I wrong?

Claudia
San Mateo, CA


Dear Claudia,

It is not you who are wrong. Turbo Tax is wrong.

When an indie is reimbursed for expenses and those reimbursements are included on a 1099, the indie may deduct all the reimbursed expenses.

Reimbursed meal & entertainment expenses are not subject to the 50% reduction. I put them on the "Other Expenses" line on the Schedule C and label them "Expenses included in 1099 income above."

The person or company who reimbursed you is subject to the 50% reduction. They often try to get around that by including the reimbursement on a 1099 to an unsuspecting or unknowing indie.

The regulation sounds this way in tax jargon: A nonemployee service provider (e.g., an independent contractor) that provides the required substantiation to and is reimbursed by the service-recipient for meal and entertainment expenses incurred on the latter's behalf isn't subject to the percentage reduction rule. The rule applies to the service-recipient, who can deduct only 50% of the reimbursement.

For those of you wanting to argue this with your tax pro: This is IRS Code Section 274(n)(2)(A) and Notice 87-23.

You see. I told you all I read a lot of those thousands of pages of tax code!!

Cheers,
June