Bad tax advice is multiplying on TikTok

Published 6:40 am Monday, April 8, 2024

Tax tips found on TikTok often turn out to be wrong or misleading, officials say.

Taking an affordable vacation is easy, accountant Krystal Todd suggests in her TikTok videos: Schedule some meetings, call it a business trip and deduct it from your taxes.

A certified public accountant in Miami, Todd has nearly 240,000 followers on TikTok and 68,000 on Instagram. She has paid partnerships with tax filing and financial services firms Intuit and TaxSlayer.

But offline, she says viewers might need more information than the tax tips in her videos.

“I’m a CPA, but I’m not your CPA,” she said of her social media content. “It’s financial education, not financial advice.”

As Monday’s filing deadline approaches, aggressive tax advice is booming online, especially on the popular video sharing app TikTok. The Internal Revenue Service, though, says a lot of the advice is dubious, exposing unwitting taxpayers to potential fines if they try to carry it out. Bad tax advice has been a problem for generations, but it spreads far more easily on social media than it did in the pre-internet days.

The tips that pop up on TikTok and on Instagram and Facebook, both owned by Meta, make splashy claims that promise big returns. One influencer, Karlton Dennis, says to buy short-term rental properties that lose money on paper, and use that to offset income from your full-time job. Another, Candy Valentino, tells followers to hire their children as employees and deduct some of their housing costs as a business expense — and if their accountant warns that could cause an audit, their accountant is wrong. Still others tell hundreds of thousands of followers to buy 6,000-pound vehicles, then write off the sticker price, maintenance and fuel.

Some creators’ videos go much further, urging people not to pay taxes at all: “Taxes are a scam.” “There’s no law to pay taxes.” “Paying taxes is voluntary.” All of those claims are false.

A TikTok spokesperson said the company removes what it deems to be scams or fraud from its platform, and promotes “best practices” when engaging with online financial content. The site prohibits content that involves the “coordination, facilitation, or instructions on how to carry out scams.” And TikTok’s financial decisions guide tells users to seek “credible sources to cross-check financial guidance.”

Meta declined to comment.

In reality, taxpayers can’t deduct salaries they pay their children unless the children truly are gainfully employed, and they can’t deduct the full cost of a fancy new vehicle unless the car is used to run a business, not for personal use.

Deducting business trips from your taxes can be legal — but it’s more complicated than just scheduling a meeting during your vacation, and experts suggest keeping business transactions and personal transactions separate to avoid red flags for audits.

And taxes are legal — and not at all voluntary.

“This is not a new phenomenon in any way. The challenge is, on the social media platforms, that the availability of these messages is so much broader,” one recent former top IRS official said. The person spoke on the condition of anonymity to discuss nonpublic agency policy. “Twenty or 30 years ago, this was something your brother-in-law handed around in a shady pamphlet on the weekends.”

Congress and the Biden administration are already concerned about TikTok for other reasons: Worries over Chinese access to the app’s user data led the House in March to vote to force its parent company ByteDance to sell the site to U.S. owners, lest it face a nationwide ban. The Senate is considering the measure. (Tax misinformation spreads on U.S.-based apps, too.)

Many of the influencers posting tax tip videos post a range of advice, much of which is sounder and less aggressive than the most eye-catching videos about big deductions. Several of them made clear in interviews that they do understand the nuances of tax law. The videos serve mostly to draw attention to their content — and to help promote the idea that their financial advice, in general, will lead to riches. Many refer viewers to other products — including stock tips, books and online courses — after offering questionable tax tips.

Todd said she thinks of her TikTok videos as educational tools, especially for young women of color like her. She explains in her videos how someone should fill out tax forms when starting a new job, for example. She said she tries to give people a more positive and nuanced outlook by talking about reasons it might be good not to get a refund, and how taxes shape society in beneficial ways. Like many TikTokers, Todd said she believes the advice she gives her in-person, paying clients as a certified professional accountant is held to a higher standard for accuracy than the advice she gives online.

Intuit in a statement said its collaboration with Todd was part of the company’s “efforts to provide career opportunities for bookkeepers, and is not an endorsement of other content.” It urged consumers to “be mindful of tax and financial advice on social media.” Representatives for TaxSlayer did not respond to requests for comment.

Todd removed videos promoting TaxSlayer products and links to TaxSlayer discounts from her social media pages and personal website after an interview and after The Washington Post asked TaxSlayer about her affiliation with the company.

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