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TikTok videos often have a ‘kernel of truth’
One big issue has been the flood of influencers pushing small businesses to amend payroll tax returns to claim the employee retention credit, or ERC, a pandemic-era tax break, according to Matt Metras, a Rochester, New York-based enrolled agent and owner of MDM Financial Services.
Worth thousands per eligible employee, the IRS recently halted processing for new amended tax returns claiming the ERC amid a surge of “questionable claims.”
Other misleading videos have included tips to form a limited liability corporation, or LLC, to deduct personal expenses, or telling all business owners to hire their children to deduct the wages and create the “earned income” needed to fund Roth individual retirement accounts for kids.
“Most of the videos on TikTok have a kernel of truth to them, but they’re embellished or it only makes sense in very specific situations,” Metras said. “But when you have a 60-second video, you aren’t trying to convey that nuance.”
Consult a tax professional
Whether you’re receiving tax information from TikTok, YouTube, Facebook or another social media platform, experts say it’s important to verify information before taking action, experts say.
Youngblood said it “becomes really sad” when someone takes incorrect advice from social media, the IRS flags their return and they owe taxes and penalties. Before making a costly mistake, he recommends talking to a tax professional “before you do anything,” he said.