IRS Issues Warning to Americans About Tax Credit

The Internal Revenue Service (IRS) issued an alert on Monday to taxpayers to be mindful of “bad advice” coursing through social media about a tax credit that the agency said was “misleading.”

The IRS pointed out that some social media users were promulgating the presence of an inaccurate tax credit supposedly available for self-employed and gig workers during the COVID-19 years. The tax break could be worth as much as $32,000—which the agency said was untrue.

“This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday,” IRS Commissioner Danny Werfel said in a statement. “People shouldn’t be misled by outlandish claims they see on social media. Before paying someone to file these claims, taxpayers should consult with a trusted tax professional to see if they meet the very limited eligibility scenarios.”

What may be available for taxpayers are benefits for sick and family leave, which are limited to only a select group of people who were self-employed in 2020 and 2021 but were forced to stop working so they can tend to individuals who may have been sick of COVID or were isolated because of the coronavirus.

“The IRS has seen thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims,” the agency said in its statement.

The agency advised taxpayers to seek more expert opinions when it comes to filing their taxes instead of relying on unreliable misinformation floating through online.

“Scam artists constantly prey on people’s hopes and try to use the complexity of the tax system to convince people there are secret ways to get a big refund,” Werfel pointed out in the statement. “All of these scams illustrate that it’s important to carefully review the tax return for accuracy before filing and rely on the advice of a trusted tax professional, not someone trying to make a quick buck or a questionable source on social media.”

The agency noted that the so-called “self-employment tax credit” was the latest false information being shared on social media around tax breaks that also included other benefits around fuel tax credits and household employment taxes.

“The IRS is seeing some similarities to marketing around this ‘Self Employment Tax Credit’ similar to aggressive promotion of the Employee Retention Credit,” the IRS pointed out. “Both are technical credits that have been mischaracterized by some as a way for average taxpayers to get a big government payment. In reality, these are very limited credits that have a variety of complex requirements before people can qualify.”