Taking tax advice from TikTok could delay your refund, IRS warns
Don't take tax advice from TikTok. That's the warning from the IRS as it steps up reviews on "other withholding" claims that have been the target of scammers and dubious social media advice.
You can find a ton of TikTok creators offering up tips. Some suggest tapping into obscure credits — like writing off your car or claiming your pet as a guard dog — can lead to larger refunds.
But tax professionals caution not all of what you'll find on social media is sound advice, and the IRS says it's led to an uptick in wrongful claims in recent years. Claiming ineligible credits could lead to fines and delay legitimately owed refunds.
"Instead of looking to ill-informed information on social media," the agency said, "a better option for taxpayers is to learn what scams are trending and to speak to a trusted tax professional."
This year's tax filing deadline is April 15.
Jackson Hewitt chief tax officer Mark Steber said many tax tips found on social media have just enough truth to be dangerous.
"There's usually some credibility in the claim, the credit, the deduction," Steber said. "It does exist, but not in the way they phrase it and certainly not in the way they're intending it."
For example, you can claim your car as a business expense, but you must be able to prove it's used primarily for business, just like you can only claim an animal as a guard dog if it's legitimately used for business security. Your personal pet doesn't qualify.
It's become a big enough issue that the IRS announced it is stepping up reviews on a variety of "other withholding" claims on Form 1040 that have been targets of scammers and schemers. The IRS is also issuing a new form to claim the fuel tax credit after many social media posts promoted it as a way for any taxpayer to inflate their refund. In reality, the credit is narrowly targeted for off-highway business and farming use.
An improper credit claim will cost you a $5,000 penalty per return.
More than 700,000 taxpayers at the end of 2024 were still waiting on refunds that were frozen for review by the IRS after claiming potentially ineligible credits, according to the National Taxpayer Advocate's annual report to Congress.
The January report partly blames "misinformation on social media."
Instead, Steber said taxpayers should focus their energy on claiming often-missed credits that they might actually qualify for, like the earned income tax credit and child tax credit.
"The thing that people really don't fully appreciate is if you leave off an income item, if you leave off your crypto, the IRS is generally looking for that and you might get a question," Steber said. "But if you leave off the earned income credit, which about one out of five do every year, or you leave off a deduction related to your self-employment the IRS doesn't … add back deductions, they don't add back credits, you don't get a bigger refund from the IRS. You leave it off, it stays off."
A lot of people are leaving a lot of money on the table. According to the IRS, eligible taxpayers left more than $7 billion in earned income tax credits unclaimed in 2020.
Do you have a money question, a consumer issue, or a scam story you want to share? Email InYourCorner@cbs.com.
