IRS Issues August Tax Credit Warning – What You Need to Know

The Internal Revenue Service (IRS) has issued a critical warning to American taxpayers about fake information circulating regarding a non-existent ‘Self Employment Tax Credit.’ Released on July 15, 2024, this alert aims to prevent unsuspecting citizens from falling victim to misinformation spread on social media platforms.

The IRS is particularly concerned that well-intentioned individuals may be misled about their eligibility for certain programs, potentially leading to legal and financial trouble if they apply based on incorrect information.

False Information

There has been misleading information from certain digital platforms about a “Self Employment Tax Credit” that supposedly benefits self-employed individuals and gig workers, especially during COVID-19. Some claims suggest that working juntas could receive up to $32,000, but the IRS has clarified that this data is false and misleading.

The legitimate credits available are specific, such as Credits for Sick Leave and Family Leave, with strict criteria for eligibility and usage. Unfortunately, fake news outlets and social media accounts have distorted these requirements, causing confusion among taxpayers.

Protecting Yourself

In response to these deceptive claims, IRS Commissioner Danny Werfel has urged the public to exercise caution and consult professional tax preparers when filing their taxes. The IRS has noted several instances where taxpayers incorrectly used Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to claim credits based on team member income instead of self-employment income. These credits were intended solely for specific COVID-19-related situations in 2020 and 2021 and are not applicable for the 2023 tax season.

Comparing the Scam

The IRS has highlighted similarities between the ‘Self Employment Tax Credit’ scam and other fraudulent tax credit schemes, such as the Employee Retention Credit. These schemes often promise large checks from the government, misleading taxpayers about the true nature of these credits. Legitimate versions of these credits are complex and apply to specific situations. Other scams include misleading claims about The Fuel Tax Credit and Household Employment Tax.

These scams exploit the complexity of the tax system and play on people’s hopes for substantial refunds. The IRS advises taxpayers to verify information on their tax returns carefully and seek guidance from certified public accountants (CPAs) or enrolled agents, rather than relying on unverified sources online.

Final Reminder

As the IRS consistently advises, taxpayers should be cautious of fake tax credit advertisements, particularly those found on social media. With August approaching, it’s crucial to rely on accurate information from trusted sources regarding tax matters. Engaging qualified tax advisors and thoroughly reviewing tax returns can help avoid the legal and financial repercussions of filing false claims. The IRS continues to remind the public to be vigilant against scams and to seek reliable information rather than relying on unverified social media posts.

Staying informed and cautious can protect you from falling victim to these scams. By following the IRS guidelines and consulting with trusted professionals, taxpayers can ensure they are filing accurate and legitimate tax returns.

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