Social media has become an integral part of our daily lives, so it’s no surprise that people turn to it for advice on a wide range of topics. However, when it comes to tax advice, social media is not the place to go. While it may be tempting to ask for help from online friends or follow the advice of a self-proclaimed tax expert, relying on social media for tax advice can lead to serious consequences.
Ben Orris, CPA and Tax Manager with Krilogy Tax1, has seen it all. “It’s completely understandable that people want to do what they can to reduce their income tax, but unfortunately, the tax code is huge and complex. Changing one thing can affect multiple other parts of a return, and that complexity is lost with these ‘one simple trick’ videos or articles.
The reality is that tax laws are intricate and constantly changing, and what may have been true last year might not be true this year. Likewise, tax advice that is appropriate for one person may not be appropriate for another, and relying on social media for tax advice can lead to costly mistakes. Well- intentioned taxpayers making decisions based on a 30 second TikTok might wind up having to spend hours of time and wait weeks or months to fix costly mistakes. Or, on occasion, they may just be stuck with the cost of the mistake.
Take, for example, a Roth conversion – this may be a great idea for a taxpayer to utilize a lower current- year tax bracket to potentially avoid paying more tax on IRA distributions in future years while in a higher tax bracket. However, a Roth conversion might be a terrible idea for a different taxpayer if the conversion causes that taxpayer to be pushed to a higher Medicare income-related monthly adjustment amount (IRMAA) bracket, potentially costing the taxpayer hundreds or thousands of dollars more in Medicare premium expenses.
Other tax advice might be misinformation – or even downright fraudulent. For instance, the pandemic saw the creation of many tax credits to help individual and business taxpayers. However, creation of these tax credits led to the circulation of incorrect information on the internet on the ways to use, misuse, and abuse these tax credits. The IRS issues consumer alerts on these (IRS Guidance on Potential Scams), but the IRS doesn’t have quite as strong of presence on social media as the array of “experts” out there.
Matt Mercer, CPA and Tax Manager with Krilogy Tax, cautions social media users to have a skeptical eye when it comes to tax advice. “There are some experts out there with reasonable general advice, but every individual’s circumstance is unique and something that applies to one person may not apply to another. And the sad reality is that so-called ‘experts’ may not have any expertise at all – or even be qualified to offer advice.”
While social media may offer a wealth of information and advice on various topics, when it comes to taxes, it is best to ask the professionals. The potential for misinformation, the lack of accountability, and the complex nature of tax laws make social media an unreliable source for tax advice. By seeking guidance from trusted tax professionals, you can ensure that you are making informed decisions and meeting your tax obligations accurately and efficiently – please feel free to reach out to your Krilogy® Tax team with any questions you may have.
1Krilogy® does not provide tax and legal advice. Krilogy® is affiliated with Krilogy Tax Services, LLC. Krilogy® Tax Services provides tax planning and preparation services for an additional cost to
Krilogy® clients. You should consult your attorney or qualified tax advisor regarding your situation.