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MARKETANALYST.US / MONEY 101

TikTok's Tax-saving Tips Spark Debate and Controversy

Social media platforms like TikTok are booming with content creators offering advice on tax-saving tricks, but it might cause trouble.
PUBLISHED APR 21, 2024
Cover Image Source: Unsplash | Photo by SEO Galaxy
Cover Image Source: Unsplash | Photo by SEO Galaxy

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



Unraveling the Psychology Behind TikTok Tax Myths

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

1. Start a Side Hustle: Among the most prevalent myths circulating on TikTok is the notion that starting a side hustle can lead to significant tax savings. Advocates suggest that expenses such as cell phone bills, internet bills, and fuel charges can be written off as business expenses, potentially reducing tax liabilities.

While it's true that legitimate business expenses can lower taxes, the key caveat is legitimacy. The IRS maintains stringent criteria to differentiate between bona fide businesses and hobbies, emphasizing the importance of maintaining accurate records. Any discrepancies could trigger audits and severe penalties.

2. Buy a Boat or Yacht: TikTok influencers tout the idea that purchasing specific types of vehicles, such as boats or trucks, can yield substantial tax savings. For instance, one creator claimed to save $21,000 in taxes by writing off gas, maintenance, and insurance expenses for a truck used in their work.

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

While this strategy may be effective for genuine business use, implementing it requires strict adherence to IRS guidelines. Simply put, using vehicles solely for personal purposes won't qualify for tax deductions.

3. Write-Off Pet Dog Expenses: TikTok content creators have seized upon the idea that expenses incurred for a pet dog, purportedly serving as a workplace guard dog, can be written off as business expenses. However, proving the legitimate business purpose of a pet dog presents significant challenges.

Questions regarding the dog's presence at home versus the workplace, as well as the allocation of expenses like food and grooming, pose substantial hurdles. "Unless you are a dog groomer, dog trainer or have a therapy pet and use it because you do counseling, pets are most likely not likely to be written off," Mara Derderian, a professor of finance at Bryant University, said.

"If you work from home and have a pug that hangs out and occasionally barks out your window, no, it's not going to pass muster."

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

4. Paying Tax is Voluntary: A disturbing trend on TikTok involves creators suggesting that paying taxes is optional and akin to voluntary contribution. This dangerous myth ignores the legal obligation to pay taxes and the severe consequences of tax evasion, including potential imprisonment.

Financial experts warn against heeding such advice, emphasizing the legal and ethical imperative of fulfilling tax obligations.

"The IRS warns taxpayers to be wary of trusting internet advice, whether it's a fraudulent tactic promoted by scammers or it's a patently false tax-related scheme trending across popular social media platforms," the IRS said.

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