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Tax Trap Alert: Beware of Viral Tax Tips on TikTok, Caution Experts 2024-05-21 02:07:52

As tax day looms closer, TikTok influencers are inundating feeds with advice on filing, including questionable suggestions on deductible purchases. Yet, financial experts issue a stern warning against heeding the plethora of unsound guidance circulating on the platform. Among the most egregious tips are claims advocating for pet expenses or hiring one's children as avenues for tax refunds. The Internal Revenue Service echoes this caution, emphasizing the potential penalties for following erroneous advice. "Taxpayers should exercise caution when considering online guidance, as it may be deceptive or inaccurately represent tax laws," warns the IRS.

Mara Derderian, a finance professor at Bryant University, acknowledges the value of social media in sparking financial discussions but underscores the necessity of discerning the credibility of sources. "While social media serves as a gateway to financial discourse, users must prioritize seeking counsel from qualified professionals," she advises.

Here are three prevalent tax tips propagated by "finfluencers" on TikTok that experts advise against adopting. While vehicle expenses can be legitimate deductions, purchasing new cars solely for tax write-offs is misguided. Proof of business usage is essential, often requiring meticulous mileage tracking throughout the year. "Maintaining a mileage log is crucial, as deductions hinge on demonstrating business usage," emphasizes certified financial planner Katie Brewer, based in Dallas-Fort Worth.

In navigating the sea of online financial guidance, discretion is paramount. Engaging with social media discussions is beneficial, but vigilance and scrutiny ensure that advice aligns with individual financial goals.

Once again, the topic of employing one's children for tax benefits arises, with experts emphasizing the necessity for genuine employment and proper payroll procedures. Katie Brewer underscores the importance of documenting children's work activities to substantiate claims in the event of an audit. Similarly, attempting to deduct a substantial salary for a young child purportedly employed as a model is likely to draw scrutiny from the IRS, warns Terrance Hutchins, a certified financial planner.

Moreover, the trend of seeking tax deductions for pets, spurred by TikTok advice, prompts clarification from Brewer. Unless pets serve a specific business-related function, such as guarding or therapy, they generally do not qualify as deductible expenses. Brewer highlights the importance of discerning legitimate deductions from spurious claims, citing the example of a home-based worker attempting to write off a pet's presence as a guard dog.

Megan Cerullo, a CBS MoneyWatch reporter, provides insightful coverage on various financial topics, including small businesses, healthcare, and personal finance, often sharing her expertise on CBS News Streaming.

In conclusion, while social media platforms like TikTok offer a platform for financial discourse, it's imperative for users to exercise caution and discernment when considering tax advice. Experts caution against blindly following trends and emphasize the importance of seeking guidance from qualified professionals. As tax day approaches, individuals should prioritize accuracy and compliance to avoid potential penalties or audits. With proper understanding and diligence, taxpayers can navigate the complexities of tax law with confidence and ensure sound financial practices.

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