A viral post on TikTok urges Americans to stop paying taxes by illegally exempting them from withholding.
This video suggests that you can avoid paying federal taxes by selecting “exempt” on your IRS Form W-4 or employee tax withholding certificate. These videos urge viewers to contact their employers to request zero-dollar withholding and assure them that businesses must comply.
The video also suggests that not having taxes withheld means not paying taxes, a false claim that could get taxpayers in trouble with the IRS if followed.
“Videos of people telling others to apply for W-4 exemptions are extremely dangerous,” says Ahad, CPA and CEO of New York City-based CPA firm Ahad&Co. Ali told Yahoo Finance. “That's not the case. There are significant implications involved that many people don't know about.”
Falsely claiming “exempt” on your W-4 does not exempt you from paying federal taxes as the video suggests. In fact, taxpayers must repay all taxes owed for the year at filing time and may be subject to penalties and interest.
The social media platforms popular with Millennials, Gen Z, and Gen Alpha are littered with other bad advice. Taxpayers, beware. Otherwise, be prepared for the tax office.
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A quick search on TikTok turns up videos that scam modest taxpayers with flashy text proclaiming things like “How rich people write off their dog's taxes” and “How can I get tax-free?”
“This is unfortunate because the tax code is already somewhat confusing to the average person,” Greg Kling, a certified public accountant and associate professor at the USC Leventhal School of Accounting, told Yahoo Finance. “Now there are people who frankly don't know what they're talking about when they post videos.”
What the TikTok “gurus” aren't saying is that taxpayers will have to pay the full amount in April if no tax was withheld that year. And if that bill isn't paid, the IRS can charge penalties and interest on the unpaid balance.
Ali said, “The taxes that I didn't pay on my salary throughout the year because I applied for exemption are now due.'' “you [could] You end up paying more money due to various penalties and interest. ”
In addition, tax authorities can pursue taxpayers who fail to file returns and charge taxpayers with serious delinquencies with tax evasion (a serious offense punishable by fines or imprisonment).
“All of these aggressive recall actions can have an impact,” Ali said. “If you don't pay in full, make a payment plan or enter into a payment agreement.” [with the IRS]If you do, levies may be placed on your bank account and your paycheck may be garnished. ”
read more: What happens if you can't pay your taxes? 5 ways to manage your bills.
Although the IRS allows exemption from withholding for certain taxpayers, the W-4 form instructions clearly state two requirements. First, the taxpayer should not have owed any taxes last year, and second, the taxpayer should expect not to owe any taxes in the current year. Year. These provisions are virtually never mentioned in the video.
“I think 99.99% of people shouldn't do that.” [exempting withholding]” Grant Dougherty, registered agent and founder of Dougherty Tax Solutions, told Yahoo Finance.
False claims are rampant on social media, garnering millions of views. One creator who advised taxpayers to stop paying taxes by cutting off federal withholding declared on the platform that he was now “tax exempt.” The video received approximately 500,000 views.
Other videos promote similar misinformation, encouraging U.S. taxpayers to go on a tax strike, and touting the ideology of “no taxation without representation.”
In one video, a viewer brandished a Form W-4T (Voluntary Withholding Agreement) to submit to human resources.
“There is no such thing,” Ali said.
He published a rival TikTok video educating viewers on the issues with selecting exclusions on a W-4 to ensure the platform also has the correct information.
“There's a younger generation.” [TikTok]”They are getting their first job, changing jobs, or going through life events like getting married or having children,” Ali said. And they all impact your W-4. So my goal was to educate them about not having surprises during tax season. ”
legal thing
One of the recurring topics in TikTok videos is the misinformation that filing and paying taxes is voluntary. But the truth is that the U.S. Constitution gives Congress the power to tax Americans in Article I, Section 8, the Taxation and Expenditure Clause. “The Congress shall have power to levy and collect taxes, duties, imposts and excises…”
“There's a group of people known as tax protesters who basically don't pay their taxes and every time they go to court they say the taxes are unconstitutional,” Kling said. “And they always lose.”
In a recent case, State of Colorado v. Stephen Darby, a man was charged with tax evasion, claiming that up to 99 dependents and exempting his own W-4 withholding since 2014 He was accused of falsifying the . The court ordered Darby to pay more than $308,000 in unpaid taxes, interest and penalties to the IRS and serve 12 months and one day in prison.
Whether or not the IRS prosecutes people for spreading false information in the future, Kling thinks it's a possibility. But the IRS doesn't exist yet.
“I don't think the law and enforcement efforts have kept up with today's situation,” Kling said.
Meanwhile, misleading videos continue to spread.
“You have so much charisma. [content creators] “We're telling people what they want to hear, whether it's right or wrong,” Dougherty said. “And people take it the wrong way and just walk away.”
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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