TikTok’s tax-saving tips are causing debate and controversy

Social media platforms like TikTok are thriving with content creators offering advice on tax-saving tricks, but this can cause problems.

With tax season just around the corner, social media platforms like TikTok are growing with content creators offering advice on tax-saving tricks. However, it is important to exercise caution when considering such advice. The Washington Post recently highlighted the spread of questionable tax-saving tips on social media, prompting certified financial experts to urge the public to remain vigilant.

Unraveling the psychology behind TikTok’s tax myths

In the world of TikTok, influencers promote various tax-saving myths, from buying boats to writing off pet expenses, enticing viewers with promises of significant savings. However, delving deeper into these myths reveals a complex interplay of psychology and financial misinformation.

1. Start a side press: One of the most common myths circulating on TikTok is the idea that starting a side business can lead to significant tax savings. Proponents suggest that expenses such as cell phone bills, internet bills and fuel costs can be written off as business expenses, potentially reducing tax liabilities.

While it is true that legitimate business expenses can reduce taxes, the main caveat is legitimacy. The IRS uses strict criteria to distinguish between bona fide businesses and hobbies, emphasizing the importance of keeping accurate records. Any discrepancies may lead to audits and severe penalties.

2. Buy a boat or yacht: TikTok influencers are touting the idea that buying specific types of vehicles, such as boats or trucks, can yield significant tax savings. For example, one maker claimed to save $21,000 in taxes by writing off gasoline, maintenance, and insurance costs for a truck used for his job.

Employees work relentlessly to make their income tax-free.  Image source: Pexels|Photo by Nataliya Vaitkevich
Image source: Pexels | Photo by Nataliya Vaitkevich

While this strategy can be effective for real business use, its implementation requires strict adherence to IRS guidelines. Simply put, using vehicles solely for personal purposes does not qualify for tax deductions.

3. Depreciation of dog costs: TikTok content creators have seized on the idea that expenses on a dog, which reportedly serves as a workplace watchdog, can be written off as a business expense. However, proving a dog’s legitimate business purpose poses significant challenges.

Questions about the dog’s presence at home versus the workplace, as well as the allocation of expenses such as food and care, pose significant hurdles. “Unless you’re a dog groomer or dog trainer or have a therapy pet and you’re using it because you’re doing counseling, chances are good that pets aren’t being written off,” says Mara Derderian, professor of finance at Bryant University.

“If you work from home and have a pug that hangs around and occasionally barks out your window, no, it won’t pass muster.”

Image source: Getty Images |  Photo by Scott Olson
Image source: Getty Images | Photo by Scott Olson

4. Paying taxes is voluntary: A disturbing trend on TikTok involves creators suggesting that paying taxes is optional and similar to a voluntary contribution. This dangerous myth ignores the legal obligation to pay taxes and the serious consequences of tax evasion, including possible prison sentences.

Financial experts warn against taking such advice to heart and emphasize the legal and ethical need to meet tax obligations.

“The IRS cautions taxpayers to be wary of relying on internet advice, whether it is a fraudulent tactic promoted by scammers or a blatantly false tax-related scheme popular on popular social media platforms,” the IRS said.