IRS Says Don’t Trust Bad Social Media Tax Advice

IRS Says Don’t Trust Bad Social Media Tax Advice

Tax advice on social media can be misleading and lead to fraud. That’s the gist of a new social media tax advisory from the IRS that warns about the dangers of following certain financial advice on social media. This latest warning is part of the agency’s “Dirty Dozen” tax scam campaign, and comes as recent data shows that 80% of young adults get most of their financial advice from social media platforms such as YouTube, Reddit and TikTok.

New IRS Commissioner Danny Werfel acknowledged in a statement that there are many ways to get good tax information, but added, “people should be incredibly careful about following advice shared on social media.”

Accounts promising things like “secret” ways to fill out a form to get, say, a bigger tax refund can be found on social media using hashtags popular during tax filing season like #taxes and #taxtips. Commissioner Werfel says that many social media tax claims are inaccurate and sometimes fraudulent, which can land honest taxpayers in trouble with the IRS.

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Some recent examples of bad tax advice circulating on social media involve forms of hardship waivers and W-2 fraud. Kiplinger reported on the W-2 tax scam on social media, which encourages people to fill out Form W-2 with false information. The idea is that you include false information, including a large amount of withholding and income, to end up filing a false W-2 to try to get a large tax refund from the IRS.

The IRS says it is actively checking for fake W-2s with many states and some tax industry partners.

What is Form 8944?

Other social media accounts are telling people to fill out IRS Form 8944, which is an e-file request for a hardship waiver. Some people on social media are saying that you can use this form to get a tax refund from the IRS even if you don’t owe a refund. Unfortunately, that claim is false.

Form 8944 is actually used by some tax preparers so that they can file certain tax returns electronically rather than on paper. Ordinary taxpayers cannot use Form 8944 as a secret way to get a bigger refund or a refund to which they are not entitled. The IRS warns that using Form 8944 in a fraudulent manner may result in civil and/or criminal penalties.

Not all financial or tax advice on social media is misleading or deceptive, which can be challenging for the millions of young adults who get most of their financial information from social media platforms.

According to a recent study, nearly 80% of surveyed people who consider themselves Gen Z or millennials get financial advice from social media. Some key findings of the study were that:

62% of respondents were empowered by social media access to finance-related information, YouTube and Reddit were among the most trusted platforms for social media financial advice, TikTok was also a popular source of financial advice and information, and only 31% of the respondents said that they check the qualifications of the people posting the social media advice.

There are social media accounts that provide accurate information on how to legally use the tax code to your advantage. But the IRS says that if something seems too good to be true with tax advice on social media, it probably is. If you are unsure, you can verify tax information circulating on social media platforms by checking the IRS’s social media accounts.

And if you’re looking for great ways to reduce your taxable income and lower your tax burden, check out some often-overlooked tax deductions, credits, and exemptions.

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