As tax day approaches, TikTok Creators Offer Filing Tips, including suggestions on what types of purchases to write off. But financial professionals warn against the advice that proliferates on social networks and which could turn out to be ill-founded.
Among the most visible, but erroneous, advice are claims that taxpayers can deduct their pets as business expenses, or hire their own children to get a tax refund.
The Internal Revenue Service also cautioned taxpayers against interpreting questionable advice on social media as legitimate, saying that following bad advice could potentially result in fines.
“The IRS is warning taxpayers to be wary of advice on the Internet, whether it is a fraudulent tactic promoted by fraudsters or a blatantly false tax scheme spread on popular social media platforms,” said the agency.
Mara Derderian, a finance professor at Bryant University, said that while it’s good for social media creators to engage young people in finance, it’s important for users to know who they’re taking advice from.
“Social media is a great way to start a conversation, and from there you want to make sure you’re seeking tax or other advice from an educated and experienced professional,” she told CBS MoneyWatch . “Everyone has unique goals and your advice should be personalized.”
Here are three tax tips circulating on TikTok from so-called “finfluencers,” or financial influencers, that experts say be wary of following.
1. You can deduct your car as a business expense
Although a car may be a legitimate business expense, taxpayers do not have a license to purchase new vehicles and automatically write them off. To start, you need to be able to prove that you actually use it to do business. One way to do this is to keep a mileage log and tally it at the end of the year.
“You can track mileage and if you have a year where you use the car more for personal than business, you can’t deduct it for that year. So that’s the catch,” Dallas-Fort said Worth. Katie Brewer, Certified Financial Planner.
2. You can hire your children and deduct their salary
Again, parents can legitimately employ their own children, but their children must actually be performing work necessary to run a business for their wages to be claimed as a business expense. “It comes up a lot, and I tell people they actually have to do something and you have to pay them through payroll. You can’t just hand out a stipend,” Brewer said. “Keep track of what they do on a timesheet in case someone is audited. This will serve as proof that you’re not throwing money at your kids for no reason.”
Additionally, deducting a $4,000 salary for your 9-month-old child that you claim is a model is another example of a spurious deduction that is likely to raise red flags with the IRS, according to Terrance Hutchins, a certified based in Frisco, Texas. financial planner.
“You wouldn’t pay them that much for a photoshoot, it’s not really reasonable,” he said.
3. You can claim your pet as a guard dog
Brewer said she’s fielding more inquiries from customers about whether they can claim their pets as guard dogs, citing tips on TikTok. In most cases, the answer is no.
“Unless you’re a dog groomer, a dog trainer, or have a therapy animal and you’re using it because you’re giving advice, pets probably won’t be written off,” a- she declared. “If you work from home and you have a pug hanging around and barking out the window from time to time, no, that won’t go away.”
Megan Cerullo
Grub5
