Let's take a look at the questionable TikTok tax advice I've seen and how you can make sure it doesn't lead you and your money astray.
While it's true that only earned income can be contributed to a Roth IRA, hiring your kids has very specific requirements. The work they do must be legitimate and age-appropriate, and the pay must be reasonable for the job performed. Simply putting your children on payroll as a tax workaround could be considered fraud.
Hiring your dog
Another viral claim about a legal "tax loophole" advises people to write off the cost of a luxury vehicle like a Range Rover or Mercedes-Benz G-Wagon on their taxes.
Forming an LLC to deduct personal expenses
Luckily, this faulty advice seems to falling out of fashion, but sometimes old videos like this one make the rounds. Creators claim you can form a limited liability company (LLC) to deduct personal expenses like your mortgage, car payments, and even grocery bills as business expenses to reduce your taxes.
The bottom line
When it comes to complex topics like these (and really all things tax-related), don't rely on brief videos from non-professionals. Improper tax strategies could inadvertently cost you much more in penalties, interest, and fees down the road.
Unless a TikTok video is from a credentialed tax expert giving a general overview of tax concepts, take it with a hefty scoop of skepticism. It's best to consult a qualified tax professional who can look at your specific situation and give you legitimate, tailored advice. What makes for a good viral video rarely translates to good tax planning.
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