Hey Alexa. Are you Making Me Dumb?

3 concerns to consider while living with a smart speaker

Smart speakers like the Amazon Echo and Google Home are popping up everywhere. According to a Nielsen study from last September, nearly one of every four U.S. households has a smart speaker - 40 percent of those homes have more than one. For some, the speaker is an easy way to play music, for others it's a unique way to easily access the Internet for information and control other Wi-Fi enabled products. However, there are some questions regarding whether or not it's a good idea to own one. Here are three concerns to consider if you own or are thinking of purchasing a smart speaker:

• Is it spying on me? Privacy is a major concern regarding smart speakers. Once powered up and connected to your Wi-Fi, it is listening in your home 100 percent of the time. Listening is its core function - it needs to hear you say the "wake" word to then process your question or command. Amazon claims that it only starts recording once it wakes up, but there is no way to know for sure. Ultimately you need to decide if the benefits of owning a smart speaker outweigh the risk of potentially giving up some privacy.
• Will it make me unintelligent? Ever since the internet became available on handheld devices, the need to think through problems has decreased. It is often debated that having the answers to almost everything at our fingertips can suppress cognitive development. According to the National Center for Biotechnology Information (NCBI) that line of thinking might not be correct. The study of the relationship between brain development and technology is still in its infancy and test results are often counter-intuitive. The conclusion? No one knows! Given this, as a buyer you should be aware of the possibility of dynamic changes in the way we think, especially children. One idea is to limit the time the device is on, just like monitoring use of cell phones, computers and tablets.
• Will I lose my manners? A smart speaker doesn't require you to say "please" and "thank you" to get what you want. A simple command is all that is required. The Atlantic published an article pondering how giving verbal commands to a smart speaker with the "casual rudeness" that is required could possibly change the way you talk to people over time. A good defense against losing your politeness is to be self-aware of your speech to others. According to a study by the European Journal of Social Psychology, it takes 66 days to create a habit. Set a reminder on your smart speaker (wink) for two months from now to politely remind yourself to pay attention to your vocabulary.

While there is no shortage of opinions regarding the use of smart speakers in the home, it's up to you to decide if it fits with your lifestyle. If you are torn, Amazon and Google have smaller versions (Echo Dot and Google Home Mini) that are relatively inexpensive. You can try it out for a while and see how you like it. If it goes well, you can spring for the larger model and move the smaller version to another room in the house. If it goes poorly, you can sell it or give it to someone else.

How to Raise a Financially Savvy Child

If you have children (or grandchildren) you have an opportunity to give them a jump-start on their journey to becoming financially responsible adults. While teaching your child about money and finances is easier when you start early, it's never too late to impart your wisdom. Here are some age-relevant suggestions to help develop a financially savvy young adult:

• Preschool – Start by using bills and coins to teach them what the value of each is worth. Even if you don't get into the exact values, explain that a quarter is worth more than a dime and a dollar is worth more than a quarter. From there, explain that buying things at the store comes down to a choice based on how much money you have (you can't buy every toy you see!). Also, get them a piggy bank to start saving coins and small bills.
• Grade school – Consider starting an allowance and developing a simple spending plan. Teach them how to read price tags and do comparison-shopping. Open a savings account to replace the piggy bank and teach them about interest and the importance of regular saving. Have them participate in family financial discussions about major purchases, vacations and other simple money decisions.
• Middle school – Start connecting work with earning money. Start simple with babysitting, mowing lawns or walking dogs. Open a checking account and transition the simple spending plan into a budget to save funds to make larger purchases. If you have not already done so, it is a good time to introduce the importance of donating money to church or charity.
• High school – Explain the job application and interview process. Work with them to get a part-time job to start building work experience. Add additional expense responsibility by transferring direct responsibility for things like gas, lunches and expenses for going out with friends. Introduce investing by explaining stocks, mutual funds, CDs and IRAs. Talk about financial mistakes and how to deal with them when they happen - try to use some of your real-life examples. If college is the goal after high school, include them in the financial planning decisions.
• College – Teach them about borrowing money and all its future implications. Explain how credit cards can be a good companion to a budget, but warn of the dangers of mismanagement or not paying the bill in full each month. Discuss the importance of their credit score and how it affects future plans like buying a house. Talk about retirement savings and the importance of building their retirement account.

Knowing about money - how to earn it, use it, invest it and share it - is a valuable life skill. Simply talking with your children about its importance is often not enough. Find simple, age specific ways to build their financial IQ. A financially savvy child will hopefully lead to a financially wise adult.

Taking a Home Office Deduction

A great tax reduction idea, if done right!

Cloud-based applications, extensive communication channels, and other new technologies make it easier to run your business out of your home. If you qualify, many home business expenses are deductible. Think you might qualify? You must first pass these tests.

1. Trade or business use test. To qualify for business use of your home you must use part of your home for a qualified trade or business. This profit seeking activity must not be a hobby in the eyes of the IRS.
2. Exclusive use test. You must use part of your home exclusively for your business activity. Blending personal use within the same space as your business activity can disallow the business use of home deductions, however, there does not need to be a permanent barrier between this space and the rest of the house.
3. Regular use test. In addition to having a qualified business activity in an exclusive area of your home, you must also use it "regularly" for your business activity. The IRS applies judgment in this area to determine the facts and circumstances around what it deems to be regular use.
4. Principal place of business test. To deduct your home office expenses, the home location must also be your principal place of business. That does not mean there cannot be other business locations, just that your home office must be your primary location. You might also have multiple business activities. In this case, you could meet the test for one of your businesses to qualify to take the deductions. With multiple locations, the considering factors are:

• The relative importance of the activities performed at each location
• The amount of time spent at each location
• The primary place used exclusively and regularly for administrative or management activities
• Whether there are other fixed locations for business use

Types of deductible expenses

This chart from the IRS gives some direction on the types of expenses that are deductible. As always, proper substantiation is required to take the deduction, so keep all receipts and statements in an organized fashion.

Sound confusing? Perhaps. If the additional work of tracking specific expenses is too much to handle, a simplified home office deduction calculation is also available to small businesses to lower their tax bill. Please call should you need help in navigating this part of the tax code.

IRS Announces 2019 Mileage Rates

Mileage rates for travel are now set for 2019. The standard business mileage rate increases by 3.5 cents to 58 cents per mile. The medical and moving mileage rates also increase by 2 cents to 20 cents per mile. Charitable mileage rates remain unchanged at 14 cents per mile.

2019 Standard Mileage Rates

Here are 2018 rates for your reference, as well.

2018 Standard Mileage Rates

Remember to properly document your mileage to receive full credit for your miles driven.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issue with a qualified tax advisor.

All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad & Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business or financial strategy concerns, contact our office.

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