But offline, she says, viewers may want more information than in-video tax tips.
“I'm a CPA, but I'm not your CPA,” she said of her social media content. “This is financial education, not financial advice.”
As the April 15 filing deadline approaches, aggressive tax advice is booming online, especially on the popular video-sharing app TikTok. However, the Internal Revenue Service says much of the advice is questionable and taxpayers who unknowingly try to implement it could be exposed to penalties. Bad tax advice has been a problem for generations, but it spreads much more easily on social media than it did in pre-internet times.
Tips appearing on TikTok, Instagram, and Facebook (both owned by Meta) make flashy claims promising big profits. One influencer, Carlton Dennis, says you should buy short-term rental properties that are a loss on paper and use them to supplement your income from your full-time job. Another, Candy Valentino, encouraged her followers to hire their children as employees and deduct some of their housing costs as business expenses. And if an accountant warns that it could trigger an audit, that accountant is wrong. Still others encourage their hundreds of thousands of followers to buy a £6,000 car and then write off the sticker price, maintenance and fuel costs.
Some creators' videos go further, telling people that “taxes are a scam” and telling people not to pay taxes at all. “There is no law to pay taxes.'' “Paying taxes is voluntary.'' All of these claims are false.
A TikTok spokesperson said the company removes what it deems scams and scams from its platform and promotes “best practices” when engaging with online financial content. The site prohibits content that includes “coordinating, promoting, or directing fraudulent activity.” And TikTok's financial decision guide instructs users to look for “trusted sources to cross-check financial guidance.”
Mehta declined a request for comment.
In reality, taxpayers cannot deduct the salaries they pay to their children unless they are truly profitable. Additionally, you can deduct the full cost of purchasing a new luxury car unless the car is used for business operations rather than personal use. Deducting business travel from your taxes may be legal, but it's more complicated than just scheduling a meeting while on vacation, and experts say to separate business and personal transactions to avoid audit red flags. I am proposing that.
And taxes are legal, not voluntary.
“This is by no means a new phenomenon. The challenge is that these messages are so widely available on social media platforms,” said one recent former IRS official. The person spoke on condition of anonymity to discuss non-public agency policy. “Twenty or thirty years ago, this is what your brother-in-law used to hand out on weekends in some dubious pamphlet.”
Congress and the Biden administration are already concerned about TikTok for another reason: Concerns about China's access to the app's user data led the House of Representatives in March to protect parent company ByteDance from facing a nationwide ban. passed a bill forcing the site to be sold to its American owners. . The Senate is considering the measure. (Tax misinformation is also widespread on US-based apps.)
Many influencers posting tax tips videos offer a variety of advice, often more sound and less offensive than the most eye-catching videos about high deductions. Some of them revealed in interviews that they understand the nuances of tax law. These videos primarily serve to draw attention to their content and generally help promote the idea that their financial advice leads to wealth. Many offer questionable tax tips and then refer their viewers to other products, such as stock tips, books, or online courses.
“I bought a $70,000 truck late last year to save over $21,000 in taxes,” Mike Porch said in a video promoting what he calls a “tax hack.” . He said the purchase “allowed me to write off gas (about $70 a week), insurance (about $350 a month), plus all the maintenance and all the upgrades.” .
Poarch acknowledged in an interview that only business use of a vehicle is eligible for the deduction, not personal use. “Sometimes in these videos it looks a little rosier than it really is, but that's to make it more viral.”
Todd said she sees TikTok videos as an educational tool, especially for young women of color like herself. In her video, she explains how you should fill out your tax forms when starting a new job, for example. She tries to give people a more positive, nuanced outlook by talking about why it's better not to get a refund and how their taxes can have a beneficial impact on society, she said. Like many TikTokers, Todd said she believes the advice she gives clients in person as a CPA has a higher standard of accuracy than advice she gives online.
Intuit said in a statement that its collaboration with Todd “is part of the company's efforts to provide career opportunities for bookkeepers and is not an endorsement of any other content.” He urged consumers to “be mindful of tax and financial advice posted on social media.” Representatives for TaxSlayer did not respond to requests for comment.
After the interview, and after The Washington Post asked TaxSlayer about her relationship with the company, Todd posted videos promoting TaxSlayer products and links to TaxSlayer discounts on her social media pages. Removed from personal website.
Influencers frequently stated that their videos intentionally gloss over important context regarding tax law.
Will Myers, who makes videos under the name Money Man Myers for his 421,700 TikTok followers and 173,000 Instagram followers, shows in a recent clip that a customer owes the IRS more than $146,000. He said he helped one customer with his tax return from what he was owed until he received a $16,000 refund. Strategies such as hiring clients' children for the business.
When a reporter asked, “Is that true?” — Meyers admitted. “They have to have a real job. The job has to be appropriate for their age. You can't say your 4-year-old is driving.” He demonstrated knowledge and even cited the case number of the Tax Court decision regarding the employment of children.
Denise did not respond to requests for comment on her video, and Valentino said she would only give interviews if the Post paid her for her time, which violates standard journalistic ethics. .
Thomas Fattorusso Jr., special agent in charge of the IRS' New York Criminal Investigation Division, said his department is aware of social media trends. In the interview, he specifically mentioned general videos about the employment of children and the purchase of trucks, but declined to discuss individual investigations.
He said social media influencers benefit directly from false tax returns generated by people who listen to tips online, just as tax professionals who lie on their clients' tax returns benefit directly. He pointed out that they may not be making a profit. Influencers aren't asking clients to file returns based on bad advice. But many people do You can make money with videos directly on social media platforms or by using the platform to sell products such as financial strategy courses.
Even though influencers do not act as tax preparers or advisors to their social media followers, the advice they give could theoretically be considered “promoters” in the eyes of the IRS. be. Fattorusso said a “facilitator” is someone who knowingly spreads a tax evasion scheme and could be the subject of a criminal investigation. Your act of telling people they can do this when you know they can't and that it's illegal is intentional. ”
Fattolusso's office cited other tax promoter cases as examples, but none of these defendants' activities were limited to social media.
Nina Olson, who served as the IRS's internal watchdog agency, the Taxpayer Advocate, from 2001 to 2019, said it would be very difficult to sue an influencer just because of bad tax advice in a video. Ta. Expanding her IRS authority to regulate tax preparers and others who provide tax advice.
IRS investigators would need to identify similar problems in large numbers of tax returns, audit those taxpayers, and track down tax return deficiencies by the same online influencers.
“You can't stop people from saying stupid things,” Olson said. “That's when they're monetizing stupidity, relying on what they say to link it to other people's actions.”
Some TikTok tax tipsters have also begun to hedge their words to avoid legal pitfalls, said Caroline Bruckner, a tax management and financial literacy researcher at American University's Kogod Tax Policy Center. It is said that there are some people. Adding phrases like “please consider” or “in my opinion” before sharing questionable tax advice could shield content creators from legal repercussions, she said.
Nick Kropp, a 30-year-old accountant from Maryland, has been making videos since 2021 that frequently show snippets of tax advice from other social media creators and explain why it's wrong. Reacting to a video in which he recommended putting assets into a trust to avoid tax, Mr Klopp marveled: “It's not true, it's fiction, it's a complete fabrication.” …A trust is not a magical entity that protects you from taxes. “It's a good rule of thumb. If it were that easy to reduce your taxable income to zero, everyone would do it,” Klopp said of a video claiming that whole life insurance can be used to avoid taxes.
He says some of his customers who are working from home have asked if they can write off new cars, which seems inherently questionable.
Kropp, like other TikTok creators interviewed for this article, said he doesn't think the government should police what someone says on social media about taxes. But he thinks TikTok should do more to ensure that users see good tax advice more often than bad tax advice. “It would be great if TikTok elevated the ranks of people who are trying to set the record straight.”
