There’s no doubt TikTok can be entertaining, and there are legit financial experts on the social media app (dare we say, financial visionaries?). But there are also a lot of inexperienced people sharing questionable tips about tax deductions and credits.
“Most TikTok-ers who are giving tax advice — a lot of them don’t have much knowledge in tax,” says Tia Uzzell, an enrolled agent, tax accountant and founder of Uzzell & Associates in Tampa, Fla.
Questionable tax advice is rampant on TikTok and other social media apps, she says. “A lot of people are passing along misinformation. Sometimes it has a hint of accuracy to it, but it’s not fully accurate,” Uzzell says. “The next thing you know you’re out here following bad tax advice.”
A lot of people are passing along misinformation. Sometimes it has a hint of accuracy to it, but it’s not fully accurate.
— Tia Uzzell, an enrolled agent, tax accountant and founder of Uzzell & Associates in Tampa, Fla.
And the repercussions of following bad tax advice are real. As in potential criminal penalties or, at the least, late-payment fines and interest for claiming deductions or credits you’re not eligible for.
If penalties and interest don’t phase you, consider this: Tax refunds are being delayed because of the bad advice being disseminated on social media, according to a recent report by the Taxpayer Advocate Service, an independent agency within the IRS.
“The IRS has received thousands of claims where it appears taxpayers are claiming credits for which they are not eligible, leading to significant refund delays,” said the Taxpayer Advocate in a December 2024 report.
Don’t make the mistake of following questionable advice. Here are three popular TikTok tax trends to avoid.
1. Claim that home office deduction, people!
OK, yes, there is a home office deduction available to eligible taxpayers.
Key word: eligible.
“With the rise of remote work, a lot of people have this misconception that you can just write off your house or home office expenses as a deduction,” Uzzell says. “To write off your home office, you would have to have a business.”
In fact, many people who work from home are employees, with income reported on a W-2 form. The home-office deduction isn’t available to employees.
That said, if you’re a freelancer, independent contractor or gig worker, then you may well qualify to deduct some costs associated with your home office.
2. Go S corp. or go home
Setting up your small business as an S corporation may make a lot of sense, and in some cases may yield a lower tax bill. But filing your business as an S corp. comes with its own costs. It’s definitely not the right move for many freelancers and gig workers.
People on social media, Uzzell says, like to say, “‘There’s so much benefit to becoming an S corp.!’ But what TikTok doesn’t hone in on is the added requirements of being an S corp.”
For example, one key S corp. rule is that you, as the business owner, must be on the payroll, paying yourself what the IRS calls “reasonable compensation.”
Beyond that salary, you’re allowed to receive distributions from your business. But if your distributions are outsized amounts and your pay is suspiciously low, the IRS won’t be happy.
“People are paying themselves a low salary and taking high distributions from their business and they’re calling it reasonable comp,” Uzzell says. “If you don’t follow reasonable compensation and you are audited, they can reclassify some of those distributions as salary and then you have to pay tax on that.”
In other cases, people neglect aspects of the S corp. rules entirely. “I’ve seen that people don’t put themselves on payroll,” Uzzell says. “They’re an S corp. and they’re still running their business as a sole proprietorship.”
Before rushing into S corp. status, Uzzell suggests you ask yourself: Do you have the cash flow to support being on payroll?
“I always tell people: Don’t listen to TikTok,” Uzzell says. “What they’re saying might not be the best situation for your business right now.”
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3. Write off 100 percent of that G-Wagon
You want to buy that Mercedes G-Wagon — and why not? You heard on TikTok that you can write off all $180,000 of that sticker price as a tax deduction.
“Everybody is like, ‘You can buy a car in your business name and write the whole thing off,’” Uzzell says.
However, just because a car is in your business’s name doesn’t mean it’s 100 deductible by the business automatically. For one thing, more than 50 percent of the use of that vehicle must be for your business.
Before you claim this deduction, ask yourself: Is there an actual business use for this car? For example, say you have a virtual consulting practice. “What are you using that car for?” Uzzell says.
Many people don’t realize that “if you’re using the company vehicle for personal use, that is a benefit that should be taxed on your W-2,” Uzzell says. “That should be included as wages.”
That said, there is a valid deduction for business use of a vehicle, assuming your use of that car qualifies.
Also, don’t confuse a car that’s owned by your business with a personal car used at times for business purposes. If you use your personal car for your business, you can legitimately claim mileage and certain other expenses, Uzzell says.
Did you follow bad TikTok tax advice? Here’s what to do now
If you filed a tax return that claimed some questionable TikTok tax advice, all is not lost.
Your next step: “Amend your tax return to claim the correct tax due or refund amount,” says Kem Washington, CPA and Bankrate tax expert.
Amend your tax return to claim the correct tax due or refund amount.
— Kem Washington, CPA and Bankrate tax expert
“In some cases, the IRS may notify you first concerning questionable tax credits or deductions claimed on your tax return,” Washington says. “Those who receive IRS notices should respond immediately and work with the IRS to correct their returns.”
Meanwhile, if a TikTok tax influencer filed your taxes on your behalf to claim tax breaks you aren’t entitled to, report it to the IRS as fraud, using Form 14157-A, Washington says.
For guidance, you may want to hire a qualified tax professional, such as a CPA, enrolled agent or tax attorney.
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