Now that people are communicating daily using social networks such as Twitter, Facebook and Instagram, they’re letting the cat out of the bag in regards to their personal and financial secrets. Of particular concern, are those who are asking questions online seeking tax advice.
On Twitter, for example, a person may follow financial experts who offer helpful tax tips. Some of these experts are legit and many are bogus. For all you know, a 12 year old boy may be posing as a 45 year old accountant, or an angry bank employee may be giving out harmful advice just for spite. You could be taking advice from a stranger that might be hazardous to your wealth.
More importantly; there are people seeking tax advice on social media, forums, and websites asking questions such as; “How can I avoid reporting all my income to the IRS so I don’t have to pay any taxes?” or “How can I keep PayPal from reporting all my online income to the Feds?”
The IRS, and other governmental agencies all have social media accounts and they are listening.
A guy in the IRS office is probably sitting at his desk right now searching for keywords on his Twitter account filtering tweets that may be suspicious. As soon as he finds one, he’ll check out the user’s profile, and next thing you know that person will be sitting in a chair being audited.
There are several types of characters out there who may get themselves into trouble:
Confused taxpayers – They want to do the right thing but have no idea how and are seeking advice from people who know what they’re talking about.
Avoiders – They want to know how they can get away without paying any taxes.
Lamenters – They tell the world all their bad luck stories and are whining about how the IRS is trying to ruin them by making them pay.
Ranters – They are on their soapbox wishing death and destruction to the IRS, and any other governmental agency they can think of.
They’re all spilling their beans to the world and giving information that may incriminate them.
Most don’t realize that once they’ve posted an update, it’s out there forever has probably been listed in Google search somewhere.
Forums are particularly dangerous zones. Unlike Twitter, with its 140 character limit, people on forums ask questions in great detail. Responders may implicate themselves by telling a frustrated taxpayer how they managed to stick it to the IRS and got away with it. For example a woman posted in response to a tax payer query about reporting Paypal income, “ Do what I did and use your husband’s Social Security number to open a new account to stay under the $20,000 cap.”
Online Sales Income Misunderstood
In 2012, the form 1099K for individual taxpayers came into being. A taxpayer receives the form if they made income of at least $20,000 or had 200 or more individual transactions on a 3rd party network such as PayPal. The form was put into place because much of the income made online was not making it to the IRS. This has confused some taxpayers. The reality is; any dollar that you make, must be reported to the IRS, whether it’s under $20,000 or not if you are required to file a tax form.
Internet sales are not the only thing that confuses taxpayers. Other questions, found online, include:
“If I get paid in cash, does that mean I don’t have to pay tax on it?”
“How can I buy a computer online that doesn’t make me pay sales tax?”
“Can I avoid paying rental income?”
“Do you have any tricks to getting away with not paying inheritance tax?”
“How much can I win at a casino without paying tax?”
Rather than scan the Internet for answers that may be either wrong or get you in trouble, it’s always better to consult your tax preparer. They are familiar with your needs and will work with you to help you save money on your taxes.
For tax help, please contact us today.