People are falling victim to social media ‘tax hacks,’ so let’s talk about it
We turn to social media for a lot of things these days — recipes, book recommendations, tips for crafting and just simple entertainment. But did you ever think Americans would start getting tax advice from social media users?
Filing your annual tax returns can be a daunting task, especially if you have more than one job, a family, own a home or have lived in multiple states over the past year. It seems logical to seek out advice.
But seeking out advice from random social media users? Yeah, that may not be the way to go.
Social media tax hacks may trigger audits, delays and penalties
The Internal Revenue Service issued a warning this year after social media users went viral with unique “tax hacks” that they say can maximize your return. Sounds all good and dandy, until you file your return and get audited.
The IRS and other tax professionals say the online hacks can be dangerous because many omit critical details.
“A lot of the advice you see does tend to have a kernel of truth to it,” Mike Valenti, tax director at Bryn Mawr Trust, told CBS News. “That said, they’re often missing key points that don’t make that strategy nearly as attractive or beneficial.”
The lack of critical details can lead Americans to experience refund delays, IRS audits and even financial penalties.
Among the “hacks” are claims that content creators may write off anything they use regularly to create their content. While this is true to an extent, the IRS is very specific.
If content creators file as self-employed, they can write off things like cameras, lighting and editing equipment. However, items like makeup, manicures and other personal-use items can be harder to write off, as tax experts say they fall into a “gray area.”
Social media users are also telling Americans to collect old scratch-offs from garbage cans to claim a gambling loss. This hack is particularly dangerous (not to mention a little gross), as it can constitute intentional fraud, resulting in big penalties if you get caught.
How to protect yourself while filing your taxes
While the faulty online advice may make this tax season even more daunting, there are things you can do to ensure you’re filing correctly and not falling victim to these viral “tax hacks.”
While many of the tips seem like common knowledge, they can get lost in the shuffle (and the excitement of possibly getting a larger return). So, when filing, keep a few things in mind.
First, who is giving you this tip or hack? Are they qualified? The only people Americans should be taking tax advice from are professionals: certified public accountants, tax attorneys and enrolled agents. If you have a financial adviser, they may be able to tell you what effects taxes will have on your financial plans, but it’s important to note they are not experts on the tax code.
Another thing to consider is whether it seems like everyone qualifies for a hack. Certified public accountant Mark Gallegos told NPR that if you’re told everyone qualifies for a “little-known tax loophole,” you probably don’t.
“Tax law is highly fact-specific,” Gallegos told NPR. “Credits and deductions have eligibility tests, income limits, documentation requirements and even industry-specific criteria.”
Tax experts also recommend being skeptical of hacks that claim it’s something the “IRS doesn’t want you to know,” and to question advice that sounds too good to be true.
This is a legitimate issue
Now, you may be reading this and thinking, “Does the IRS really punish people for following social media hacks?” The answer is yes.
The National Taxpayer Advocate’s annual report to Congress notes that the IRS assessed more than $160 million in penalties last season for improper claims resulting from social media advice.
So at the end of the day, talk to professionals when filing your taxes, take your time, and be skeptical of what you see online, especially if it seems too good to be true. Happy filing!
Ella Rae Greene, Editor In Chief
