Social media can be a great place to connect with like-minded people and discover new dinner recipes, but it's not the best place to get your tax advice. In a recent update, the IRS said it’s already assessed more than $162 million in penalties tied to false tax credit claims spread on platforms like TikTok and Instagram.
How the Scams Work
Bad actors are posing as tax experts on social media and encouraging people to file for credits they don't actually qualify for. Some of the most common schemes involve the following, according to the IRS:
- Posts on social media claiming that anyone can qualify for specific tax credits.
- Claims of quick refunds that require little to no documentation.
- Advice to file amended returns, even if you were never eligible for the credits in the first place.
- Guidance that encourages you to disregard IRS notices or reply with inaccurate information.
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The Cost of Falling for Tax Scams
Filing inaccurate claims based on bad advice from social media has already cost taxpayers $162 million in penalties, and that number could go up even more as audits continue.
"These schemes are not only misleading but can cost taxpayers dearly," said James Clifford, IRS director of return integrity and compliance services. "People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply," he said.
If you think you might have fallen for these schemes, amend your tax return as soon as possible using Form 1040-X, Amended U.S. Individual Income Tax Return. You should also report it to the IRS by emailing phishing@irs.gov or file a complaint with the Treasury Inspector General for Tax Administration.
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How to Protect Yourself
The easiest way to avoid falling into these traps is to remember that if something sounds too good to be true, it probably is. Though you can find helpful advice on social media, it's also flooded with false or misleading claims. So always cross-check claims with IRS.gov before filing your taxes.
If you're unsure about anything, contact a licensed tax preparer to clarify what credits you actually qualify for. And remember, never share your personal info online since some scammers may use tax advice posts as bait to phish for your Social Security number or banking details.
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