Why your clients absolutely cannot claim a $32K Self Employment Tax Credit

There’s never a shortage of misinformation on social media and plenty of it relates to investments and other financial matters.

Take for example the Self Employment Tax Credit, not that you or anybody else actually can take it, because it does not exist. But reports claiming that it does have been circulating online, prompting a warning from the Internal Revenue Service.

Some dubious marketing organizations are claiming that taxpayers can receive payments of up to $32,000 for the pandemic era if they are self-employed. The information is refencing certain elements of a much more limited and technical credit called Credits for Sick Leave and Family Leave. The IRS says it will be closely monitoring claims for this credit, which many people do not qualify for.

“This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday,” said IRS Commissioner Danny Werfel. “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.”

Similar misleading and “aggressive” marketing has been identified by the IRS relating to Employee Retention Credit, another technical credit that is not widely available to taxpayers and has very limited eligibility criteria. The Fuel Tax Credit and household employment taxes have also been the subjects of scams.

The IRS is urging taxpayers to talk to a trusted tax professional, not rely on marketers or social media for tax advice.

“These improper claims have been fueled by social media and people sharing bad advice,” Werfel said. “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. 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.”