Beware tax scams and social media misconceptions

In recent years, social media has become a source of tax misinformation. Where tax schemes proliferate, misuse of tax credits or deductions occurs, costing taxpayers more than $162 million since 2022, according to the Internal Revenue Service. 

Before the internet was as prevalent, Don Moberg of Big Mountain Accounting in Post Falls said word of mouth was the primary source of incorrect tax-filing approaches. 

“I call it bar information,” Moberg said.    

When he hears the phrases “My friends said” or “My neighbors said,” he and other tax preparers at Big Mountain Accounting brace themselves to correct course for a client.  

“Just because your friends or neighbors said it doesn’t mean it’s right,” Moberg said.

Certified public accountants and organizations such as the Illinois CPA Society work to prevent fraudulent tax schemes from circulating, which can lead to inaccurate or frivolous returns and fines, including a $5,000 civil penalty. 

Julie Bryant said one major tax question comes up frequently among Big Mountain clients.    

“We get a lot of questions about married people filing separately or married filing together,” Bryant said. 

According to the IRS, most couples save money by filing jointly unless filing separately yields a lower tax bill. 

Learning how gambling wins and losses work on tax forms can often be a source of consternation for people who have never filed them before, Moberg said.  

First-time homebuyers also often face a similar learning curve when it comes to itemized deductions.  

“You bought a house for $8,000, but in order to actually get these itemized deductions you needed to spend over $30,000,” Moberg said. 

Getting involved in the stock market can also have unexpected effects on a tax return. 

“People don’t understand why they have to pay capital gains on stocks,” Moberg said. 

Claiming a child on a tax return also has very specific requirements that people sometimes try to leverage inaccurately, Moberg noted. 

“I’m claiming my niece as a dependent because she can’t work anyway. The requirement is ‘has to live with.’ The IRS said they must live with them for over half a year so sometimes parents try to claim,” Moberg said. 

If you come across tax advice on social media, talk to a professional about whether you actually qualify. 

According to the Illinois CPA Society, fraudulent tax advice and social media tax scams often claim that everyone qualifies for certain tax credits, convince taxpayers to lie on tax forms, and promise “easy” or “fast” refunds with little documentation required.  

Other scams direct taxpayers to non-IRS.gov websites, encourage them to ignore IRS letters, instruct them to respond with false information, or even tell them to file amended returns, even if they didn’t originally qualify for the credits or deductions. 

Taxpayers who come across suspicious social media posts should report them to the IRS, email reports to [email protected], or file a complaint with the Treasury Inspector General for Tax Administration.