Photo Credit: pexels
Right now, 80% of young adults get their financial advice from social media platforms like YouTube, Reddit, and (yes) TikTok. So perhaps it’s not surprising that a lot of this advice is not to be trusted. In fact, the situation has become so bad that the IRS finally had to come out and state the obvious: you shouldn’t be basing your tax decisions on information you find via social media. In a worst case scenario, following online tax advice from someone on YouTube might get you into legal trouble.
Don’t trust social media for tax advice
There are a number of factors at work here. One of them, of course, is the gullibility of many people who don’t check or verify the qualifications of the person giving advice. In the old days, you wanted to see that a person had a CPA or some other certification before you took financial advice from them. In the era of social media, though, it appears that having a high follower count is a useful proxy. Who really cares if a person has a degree in accounting as long as they have 100,000 followers, right?
Another problem, quite frankly, is that financial advice is all over social media, and it’s remarkably easy to find. There are hashtags – such as #taxes and #taxtips – that are specifically designed to make this content as easy to find as possible. And a clear majority of people (62% according to one recent survey) believe that social media “empowers” them to access financial information. It helps them find the tips and tricks that can be used to save money on their tax forms.
And, finally, there’s the very simple matter that, in the era of social media, everyone is looking for the easy way out. People believe that by learning “one simple trick,” they can find a tax loophole worth tens of thousands of dollars. They believe that a 5-minute tax quiz is the key to becoming smarter about taxes. And they think that learning to outsmart the system is the key to success. Combined, these factors really explain the propensity to take part in many of the worst kinds of tax advice.
Common tax issues
According to the IRS, there are two very common types of tax fraud that are being perpetuated online. One of them is W-2 fraud. This basically involves filing a fake W-2 statement in order to get a big tax refund. I don’t know why people do this, but filing a “fake” document with the IRS is just about the worst thing that you could possibly do. Who could possibly ever trust this advice?
Another common issue is filing the wrong form for the wrong reason. For example, there is a common belief that filing IRS Form 8944 (known as a hardship waiver) is a way to avoid paying taxes. But that’s not the purpose of the form. Yes, it’s a hardship waiver – but the “hardship” is having to file electronically. You still have to pay your taxes. This seems like some kind of misunderstanding rather than purposeful deceit. Somebody, somewhere along the line, probably got out of paying taxes after filing this form, and it became some sort of viral social media tax advice: File this “secret” form that nobody knows about, and you don’t have to pay taxes.
Can you trust social media for tax advice?
So is there any place on social media that can be used for tax advice? Some people swear by YouTube, while others swear by Reddit. But I really can’t recommend either social media platform. Everyone has a very unique tax situation, and if you don’t think you can handle your taxes with the help of TurboTax alone, then it might be time to go Old School and hire a CPA to prepare your taxes for you. But don’t worry too much – you’ll probably be able to find a local CPA via Facebook or LinkedIn if you look hard enough.