A (3:43)

Yeah. Some people will say online, well, the IRS is understaffed. They are not going to catch it, they're not going to ask, they're not going to follow up.

B (3:52)

Correct. Sometimes people play the game of what we call IRS roulette, where essentially it's like, well, they're never going to catch you. What's the percentage? And they try to play the odds like they're gambling with it. Right?

A (4:02)

Yeah.

B (4:03)

And that person that does get audited, it does that. I mean, there are, you're not just going to get slapped on the hand. There's, there's penalties with that. There's risk. There could be civil risk, there could be criminal risk. I mean, of what you're trying to do. And I think that's where people, they see something like, oh, I could do this. And they think they can get away with it. And then over time, they realize they're in over their head and they're in big trouble.

A (4:25)

It occurs to me that in the realm of bad tax advice that you might see, for instance, on social media, sometimes it'll be called out. Like, just do this. You can get away with it. The IRS isn't gonna catch you. But sometimes it won't be called out. They'll just say, you qualify for this thing. Or like it's so easy. And then the person might not even realize that they're doing something wrong when they file their taxes.

B (4:49)

Social media kind of turned tax advice into a level of Entertainment. And one of the things I do see with this quite a bit is when you know that voice in the social media says everyone qualifies. Well, everyone doesn't always qualify for everything. Right? You'll see someone claim that you can write off your dog as a security system or that forming an LLC automatically creates new deductions. I see that quite a bit. Right, Yeah. I can set up an LLC and if it's legit business purpose, I can write off those ordinary necessary business expenses. But just because I set up an LLC doesn't mean I get to write off everything I do in my life. Right, but that's kind of what they're promoting. That really takes people into a direction that can get them in trouble. If someone posts something that is just blatantly wrong, or maybe even gray, you know, no one understands what's really being said. The tax community will reach out, they'll post to it, they'll respond to it, they'll DM some, whoever they can, and they'll start to get a groundswell of like, hey, can we clarify what's going on here? And it's not like they're policing it, they're just, they're very active in seeing this stuff, I can tell you that.

A (5:56)

Takeaway one, if you're seeing tax advice online that says, don't worry about this, the IRS will never catch you. Remember, that is a game of chance and you're the one who'll have to deal with the consequences. Also, in general, if you see a piece of tax advice on social media that sounds interesting, consider that a starting point. Now it's on you to figure out if that deduction or whatever else is real and if you actually qualify.

B (6:20)

So you go online, you see a 20, 30 second clip, maybe longer, and you, you watch it, you're like, oh, that seems interesting, right? The first thing you need to do is just kind of slow down, take a breath, right? In my opinion, opinion urgency is the scammer's fuel. That's where they get their oxygen from. Right? Second, assume that if something applies to everyone, it probably applies to almost no one. Tax law is highly fact specific. So credits and deductions have eligibility tests, income limits, documentation requirements, and even industry specific criteria. You can even click on the person. Does it say that they're a cpa, a certified public accountant? Does it say that they're a jd, a tax attorney? Does it say that? Maybe even just an enrolled agent where people can go and say, hey, how do I know I heard something, it sounds too good. To be true, but I want to check it out. Well, you can go to IRS.gov and you can pretty much search for anything there. The only thing I always tell people is like, does it talk about risk if you do this? You may be able to get this deduction, but here's the risk. They're never going to tell you the risk if it's not legit. A legit professional will talk about audit exposure, they'll talk about substantiation, they're going to talk about compliance. Whereas maybe a tax hack influencer is not going to talk about anything like that because it's going to turn people off. Right?

A (7:35)

Okay, so let's say you do come across some sort of tax credit or deduction on TikTok and you think, yeah, maybe I qualify for this. You can go to irs.gov as a starting point and type your question into the search bar. I have found, though, that the search function doesn't always work and bring you the results that you need. It depends on how you ask the question. So where else can you go after that?

B (7:58)

So, for example, you might be listening to TikTok, you know, and you're like, well, this sounds amazing. Can I write off my dog? So, you know, you can go to Google would be where I would go. And then it would give me sources.

A (8:13)

Let's see, dog deduction, taxes. I'm putting this in an AI right now, having a guard dog for your business, a service animal, a foster dog, a dog that generates legitimate income expenses, right? And then I can be like, sources from IRS website. And then it tells you the publication numbers, the IRS publication numbers, where you can find this.

B (8:41)

Right? So a lot of times you'll put in something and you may not know the answer to it because it's complex, right? So if you know, hey, it's Publication 534, or it's Code Section 162, or it's a Treasury reg, whatever the case may be, then you can put that stuff into the IRS search bar and it's going to take you right to the source. It's going to quote it in there.

A (9:02)

I'm going to go down the rabbit hole here. So it says it's IRS Publication 502. That includes costs for a guide dog or service animal, because those are medical and dental expenses.

B (9:16)

Correct. And if you're trying to take a deduction or deciding whether to pick up something into income or, or take a credit or whatever you're trying to research, what you're doing is you're trying to Take a position on your tax return. That's what it is. And the IRS says you have to have substantial authority in order to support your position. Otherwise, if it's audited, they will disallow it. And substantial authority means not, oh, I have a TikTok video or an Instagram post that says I can do this. There's nothing substantial authority about that. It is I can do this because Internal Revenue Code, whatever says I can do it. And again, if it's something that's very complicated and you can't get to it, that probably tells me you need to talk to someone that does know what they're doing.

A (10:09)

Takeaway 2 Always use a primary source to verify tax information. That means looking@irs.gov and reading the particular section of the IRS publication that applies. Now, sometimes you might type something into the IRS.gov search bar and not find what you're looking for. In those cases, you can use a search engine or an AI program to send you in the right direction. Now, I want to be clear that is not your final step, but it can be a helpful tool. So you can type Can I deduct my dog into an online search or AI and ask specifically for IRS publication numbers and links to sources from the IRS website. And then you read those. Of course, you can always hire a professional like a cpa, a certified public accountant to explain this stuff to you or help you file your taxes. We'll have more Life Kit after the break.

C (11:02)

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A (11:34)

Why do you think that people peddle so much misinformation about taxes on social media? Is it just for clicks?

B (11:41)

There's some people that are looking to just become influencers and this is their livelihood and they're making money from it and they're just trying to sell anything in order to get the clicks. There are other people that have a different hidden agenda behind it, and sometimes it's hey, can I get your credit card information? Can you pay some money? I need a retainer and it's not a legit person.

A (12:00)

Yeah, yeah. So now we're talking about more traditional scams, like where someone is trying to steal your information or steal your money. What are some of the tax scams that you're seeing this year, for instance?

B (12:15)

Oh, yeah, so there is the tax resolution scam. There'll be like some sort of person that reaches out to you and says, hey, there's an IRS liability reduction program and we can help you with this. And it all seems official, right? If you owe the irs, we'll help you. Right now the psychology here is there's an urgency part of it. This is our final attempt to reach you. Or they don't owe anything, but they're getting somebody that's insisting that they may owe something. Right. Getting threatening phone calls that says, hey, if you don't pay this, you will end up in jail. So that's just so false. So that's one level of scam I see quite a bit. Another one is you'll see texts that say, your refund is ready, you just need to verify your identity. Or an email that says, hey, you owe money or you're getting a refund, or can we verify something? Delete that.

A (13:06)

What about on social media when it says like, click here and you'll get this credit, or click here and I'll explain everything.

B (13:14)

I would stay away from that.

A (13:15)

Yeah.

B (13:16)

I mean, the likelihood is it's a tax hack that is looking to either gather information about you by getting you to click on it and fill out some information, or it is some other scam that's going to then hack into your system by you clicking on it.

A (13:32)

Takeaway 3. This tax season, you may also run into straight up tax scams where someone tries to hack into your computer by getting you to click a link. Or someone tries to steal your information by getting you to fill out an online form. You might also get a text saying, hey, this is the IRS, you owe us $8,000. Pay now or you're going to jail. P.S. we only accept payment and gift cards. Okay. It won't be quite so obvious, but remember, the IRS is not going to text you to threaten you with jail time. The IRS will only text you with your permission. Now, they might call you, but if they leave a message, they say on their website that it won't have any specific details. So that's something to look out for. Oh, and they don't accept gift cards as payment. If someone does leave you a voicemail claiming to be the IRS and they give a callback number, go to IRS.gov to verify that the number is Legit. Or call the IRS directly with the number on its website. How can you make sure if you are hiring someone to help you with your taxes that they're not scamming you and that they actually have the right credentials? They're not trying to steal your information?

B (14:38)

Great question. Those are the tax prep scams we see. So. So a ghost preparer prepares your return but refuses to sign it. Anyone you're paying to prepare your tax return also needs to sign it as paid preparer at the bottom of the tax return. Their name should be on there, their name of their firm, their name of their address. And so that's not optional. It's required. They also have to have a valid ptin, and it's a specific number that's issued to people that are licensed and authorized to sign tax returns, do tax

A (15:06)

Advisors, or do CPAs. Does someone who's preparing your taxes need your Social Security number to do that?

B (15:13)

Well, we need your Social Security number to prepare the tax return because it does get reported on the tax return. And again, to be honest with you, we get bank account information. We have access to a lot of personal information about your family, your kids, date of birth, the whole thing. Right. So before you start giving any random person all that information, you need to kind of do a little bit of due diligence to verify that they are who they say they are.

A (15:39)

Okay, takeaway four. Your tax preparer should have what's called a ptin, a preparer Tax identification number that comes from the irs. Also, they should always sign your return as a paid preparer and include their name, the name of their firm, and their address. Now, there are a few different kinds of professionals who can prepare taxes for you. Enrolled agents, certified public accountants, even attorneys. And the list goes on. The irs, by the way, has a public directory of credentialed tax preparers. All right, so let's get into some of those tax law changes that hit this year. In July of 2025, President Trump signed a law called the One Big Beautiful Bill Act. That law created and expanded certain tax deductions, and one is the state and local tax deduction. When you're doing your taxes, you decide whether to take a standard deduction or to itemize your deductions. You would itemize if your expenses added up to more than the standard. Those expenses can include things like medical costs, charitable donations, mortgage interest, and the state and local taxes you paid in the past year. There used to be no dollar limit on the state and local tax deduction, but the tax overhaul law passed during the last Trump administration changed that. It said now you can only deduct $10,000 of state and local taxes as an individual. So effectively it cut back on a tax deduction that had been very helpful for a lot of homeowners and for a lot of people who live in high tax cities and states.

B (17:11)

But now the cap has been raised to $40,000. It does have some limits.

A (17:16)

Specifically, there are income limits, and we're not going to get into all of those here. But yeah, see if you qualify a few other new deductions. If you get overtime pay, you might be eligible for a federal tax deduction of up to $12,500. And if you get paid tips, you may also be eligible for a deduction up to $25,000. And if you're 65 or older, you might be eligible for a $6,000 deduction. If that's not you, by the way, maybe it's your parents. And you can take any of those three that I just mentioned, whether or not you now, this is not an exhaustive list, but these are some of the deductions to look into this year before you file. Now it's time for a recap. Takeaway 1. If you see a piece of tax advice on social media that sounds interesting, consider it a starting point. It's on you now to figure out if that deduction or whatever else is real and if you actually qualify. Always use a primary source to verify tax information. That means looking@irs.gov and reading the particular section of the IRS publication that applies. Of course, you can also hire a professional for tax advice, tax preparation, or both. Takeaway 3. This tax season, beware of scammers who may try to steal your information or get you to send them money. Remember, the IRS is not going to text you to threaten you with jail time. The IRS will only text you with your permission. They say they might call you, but just know if they leave a message, it won't have any specific details. If someone leaves you a voicemail claiming to be the IRS and they give a callback number, you can verify that it's actually them by going to IRS.gov and searching for that phone number. You can also call the IRS directly with the number from its website. Takeaway 4. Your tax preparer should have what's called a PTIN, a preparer tax identification number that comes from the IRS. And they should always sign your return as a paid preparer and include their name, the name of their firm, and their address. Okay, that's our show. Before we go. I have a question. Would you mind rating and reviewing Life Kit in your podcast app? You could tell us a favorite tip that you've learned, or you could tell us about what kinds of episodes you like the best. We love hearing from you and it would help us out a lot. All right. This episode of Life Kit was produced by Margaret Serino. Our digital editor is Malika Garib, Meghan Keane is our senior supervising editor, and Beth Donovan is our Executive producer. Our production team also includes Andy Tagle, Claire Marie Schneider, Sylvie Douglas, and Mika Ellison. Engineering support comes from Becky Brown. Fact Checking by Tyler Jones. I'm Marielle Segarra. Thanks for listening. This message comes from Charles Schwab with their original podcast Choiceology. Choiceology is a show about the psychology and economics behind people's decisions. Download the latest episode and subscribe@schwab.com podcast

C (20:34)

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