20 Dec Social Media Tax Scams
Below is some valuable and accurate information from the IRS. Social Media is not the place to get tax advice. Be sure to check with your tax advisor before implementing any tax advice you read on social media.
The IRS is aware of various filing season hashtags and social media topics that can lead to inaccurate and potentially fraudulent information. A common theme among many of these examples involves people trying to use legitimate tax forms for the wrong reason. The IRS has seen a spike this year in the following types of scams on social media:
“Self Employment Tax Credit”:
Promoters on social media have made misleading claims that taxpayers – particularly self-employed individuals and gig economy workers — can get up to
$32,000 through the so-called “Self Employment Tax Credit.”
In reality, there is no “Self Employment Tax Credit”; rather, scammers are advising taxpayers to incorrectly use Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to improperly claim the specialized and very limited Sick Leave and Family Leave Credit on their income.
People who were self-employed could claim credits for Sick and Family Leave only for limited COVID-19 related circumstances in 2020 and 2021; the credit is not available for 2023 or 2024 tax returns.
Household employment taxes:
In a variation on the “Self Employment Tax Credit” scheme, taxpayers are being advised to “invent” fictional household employees and then file Schedule H
(Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.
Inflated income and withholding:
This scheme encourages people to use tax software to manually fill out Form W-2, Wage and Tax Statement, and include false income information.
Scam artists suggest people make up large income and withholding figures, as well as the employer from which it’s coming. They then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund – sometimes as much as five figures – due to the large amount of withholding.