As misinformation continues to circulate on social media, the IRS has issued a warning to taxpayers regarding a viral but misleading claim about a supposed tax credit for self-employed individuals and gig workers.
This claim has created confusion, suggesting that eligible taxpayers could receive up to $32,000 in tax benefits. The IRS has stated firmly that these claims are false, urging people to rely on professional advice rather than unverified information online.
Confusion
The misinformation on social media falsely promotes a “Self-Employment Tax Credit” that supposedly offers substantial relief for self-employed and gig workers affected by the COVID-19 pandemic.
According to the claim, individuals could qualify for a tax credit as large as $32,000. However, IRS Commissioner Danny Werfel has clarified that this claim is unfounded and that taxpayers should not be misled by these exaggerated promises.
As Commissioner Werfel explained, “This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday.” The IRS advises people to verify their eligibility for tax credits through trusted professionals and official IRS resources, emphasizing that some credits do exist but apply only under very specific conditions and for limited groups of people.
IRS
The IRS does acknowledge certain tax benefits for self-employed individuals under strict circumstances. Specifically, tax credits were made available for 2020 and 2021 to self-employed individuals who had to stop working to care for themselves or others due to COVID-19. These credits applied to those who lost income while isolating or caring for people affected by the virus, but they are far from the universal benefits suggested in the misleading social media claims.
According to the IRS, many claims have been filed by taxpayers who are not eligible for these credits, causing delays in processing refunds and triggering additional verification requests. The IRS states, “The IRS has seen thousands of dubious claims 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.”
Scams
The so-called “Self-Employment Tax Credit” claim is just the latest in a series of social media-driven tax misinformation campaigns. Previously, false claims about fuel tax credits and household employment taxes spread online, suggesting that average taxpayers could take advantage of specialized credits. In reality, these credits only apply to a small number of people under very particular circumstances, yet they are often advertised as “hidden” benefits that the government allegedly wants to keep secret.
The IRS has noted similarities between this misinformation and the promotion of the Employee Retention Credit (ERC), another limited credit for businesses that was widely misrepresented. Both credits are technical and come with specific qualification requirements, yet were marketed as simple ways for anyone to get substantial refunds.
Protecting Yourself
Scammers often use the complexity of the tax system to deceive people. Social media misinformation can result in complications like delayed refunds and requests for extensive documentation. To avoid these issues, the IRS encourages taxpayers to approach online claims with caution.
In case of any uncertainty about credits or eligibility, taxpayers should refer directly to IRS resources on their website, where the agency publishes accurate information. For complex questions, consulting a certified tax professional is advisable.
Final Thoughts
The IRS’s recent warning highlights the importance of verifying tax information with credible sources rather than relying on social media. While legitimate tax credits exist, they apply to specific situations and often have technical requirements. Following IRS guidelines and consulting professionals can help ensure your tax filings are accurate and prevent potential issues with refunds.
FAQs
What is the Self-Employment Tax Credit?
The Self-Employment Tax Credit, as promoted on social media, is misinformation. It does not exist as described, though certain limited credits were available for self-employed individuals in 2020 and 2021.
Did the IRS create a new tax credit for gig workers?
No, the IRS has not created any new tax credit for gig workers. Limited credits exist for 2020 and 2021 under specific COVID-19 scenarios.
Are there penalties for claiming ineligible tax credits?
Yes, claiming ineligible credits can lead to delayed refunds, IRS scrutiny, and potential penalties.
How can I verify tax credit eligibility?
Visit the IRS website or consult a certified tax professional for accurate information on eligibility.
Can social media tax advice be trusted?
It’s best to verify any tax advice with a trusted professional or official IRS resources, as social media claims are often misleading.
