Tax season is around the corner, and your social media feed is probably already flooded with “life-changing” tax hacks promising huge refunds and loopholes the IRS supposedly doesn’t want you to know about. But here’s the truth: most of these so-called tips are wildly inaccurate, often illegal, and can land you in hot water with the IRS.
The IRS has issued a stark warning about the growing threat of bad tax advice circulating on social media. These scams aren’t just misleading; they can lead to audits, hefty fines, and even legal trouble.
The Rise of Tax Scams on Social Media
Scammers and self-proclaimed “experts” are using platforms like TikTok and Instagram to spread fraudulent tax schemes. Some of the most common scams include:
The Fake Self-Employment Tax Credit: Promoters claim self-employed individuals and gig workers can receive up to $32,000 in refunds by using something they call the “Self-Employment Tax Credit.”
The truth is … this credit was only valid for COVID-related sick and family leave in 2020 and 2021. It’s not applicable for 2023 or 2024 tax filings.
Household Employment Tax Fraud: Taxpayers are being advised to “invent” fictional household employees and then file Schedule H (Form 1040) to claim fake sick and family medical leave wages as refunds.
The truth is … Schedule H is meant for taxpayers who hire and pay household employees like nannies and housekeepers and are responsible for their employment taxes. What’s more, filing fake claims is illegal and can result in severe penalties.
Fuel Tax Credit Abuse: Influencers claim anyone can claim the Fuel Tax Credit to receive a significant refund.
The truth is … this is an extremely specialized credit designed exclusively for off-highway business and farming use. It does not apply to regular consumers filling up their cars at the gas station.
Inflated Income and Withholding Scams: Scammers encourage taxpayers to manually fill out Form W-2 with inflated income and withholding amounts, tricking the IRS into issuing large refunds based on artificially high withholding figures.
The truth is … filing false income and withholding information is blatantly illegal. IRS systems are highly sophisticated. Once the data from employers and payroll systems is cross-referenced, it will trigger audits and criminal investigations.
“Claim of Right” Misinterpretation: Promoters encourage people to deduct their entire income as an expense under misleading interpretations of the tax code. They claim wages can be deducted as “necessary expenses for the production of income” or “compensation for personal services actually rendered.”
The truth is … this scheme is a complete misinterpretation of the Internal Revenue Code and has been repeatedly dismissed by tax courts.
Relying on Social Media for Tax Advice Is Never a Good Idea
Social media tax hacks often share three common problems:
- Influencers rarely face consequences when their followers face audits or fines.
- Tax laws change frequently, and yesterday’s loophole could be today’s violation.
- Taxes are complex, and there’s no one-size-fits-all solution.
Don’t gamble with your financial future!
At Boris Benic and Associates, we’ve seen firsthand how misinformation can derail financial plans and cause long-term damage. Our team stays updated on the latest IRS regulations, offers personalized guidance tailored to your unique situation, and provides audit support when you need it most. Don’t let social media tax “experts” become your financial headache. Trust the true experts at Boris Benic and Associates instead.