With tax day quickly approaching, Adam Brewer, tax controversy attorney, fact checks some of the supposed ‘loopholes’ you might see online.

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Fact Checking TikTok Tax Advice, So You Don’t Get in Trouble with the IRS

Taxes are due in just more than two weeks. And if you open Tik Tok, you'll see dozens of so called financial experts divis in their viewers on how to save thousands of dollars on their tax bill this year before you file, you want to make sure that all the advice you have is legitimate and accurate. So, here to give us the truth behind the trends is a brewer tax controversy. Attorney Adam, thank you for joining. Yeah, good morning. Thanks for having me. All right. So let's start with the business expenses. What are the guidelines uh for writing off business, meals and travel? Ok. So let's start with the big picture thing has to be ordinary and necessary. So, uh, before you start looking for like a loophole or some way to deduct your entire trip, just think of keep that in mind ordinary and necessary. Um And then yeah, from there, I mean, really we're looking at, uh, deducting either the full amount if it's entirely business purpose or deducting some part of it, if it's uh if it's some personal, some business. But for meals, a lot of these tiktok advice, uh pieces you'll see it says, you know, just talk about something for business, just, you know, do some little portion of it. Uh, for the viewers out there, I would say be very cautious about that because, uh, meals, travel, vehicle expenses, those are always gonna be issues that the IRS tries to zero in on, on an audit just because there's a long history of taxpayers taking advantage of those deductions. Ok. This is good to know offer for anyone who hasn't filed the A a and that we do see take to influencers also say that buying a car, an expensive car is a quick way to save thousands of dollars on your taxes. Is that true? Uh It can be, but again, ordinary and necessary. So, um on the vehicle part, again, it's a lot of it is what portion is business and then what portion is personal. So I, I hate to see for my clients or for your viewers. Uh a big vehicle purchase, you know, cars are expensive these days. So I see people purchasing vehicles over $100,000. Um Yeah, you wanna save on taxes, but you're in business to put money in your pocket not to pay it to BMW or Mercedes or Tesla. Um So yeah, just be cautious on those. Again, it's, it's gotta be ordinary and necessary for your business. Um And then on the vehicle especially, um if you're using it to drop your kids off at school or to go buy groceries or do anything else personal, that personal percentage of use that's gonna be removed from your possible tax deduction. So, one of the most misunderstood deductions might be this so called Augusta rule, a break down what this rule allows taxpayers to write off and what exactly it doesn't. Yeah, Augusta, that's a big one. I, I never really saw that until recently, so I even had to put it on this schedule bs that I made to, to warn my clients. Um But yeah, the Augusta rule says that uh you can rent your home 14 days tax free and that is true, you can rent your home out 14 days tax free. But on tiktok, they take it one step further and that's the key and they say, hey, you're gonna rent your house to your own business. So your business is gonna pay you the money, you'll get the money personally tax free, but then your business is gonna deduct it and again, ordinary and necessary. Uh If you're a plumber, you probably don't need to be renting your house 14 days a year. You know, there's really few businesses that would require that. Um So just be cautious on that one again, if it sounds too good to be true. Um We know now it probably is so people might think that they can deduct expenses uh for their pet. Is that true? Yeah, that's a fun one. I guess again, it depends what kind of business you're in. Um, I say, you know, myself, I'm a tax attorney. There's a, there's a dog somewhere back there. Uh, you might even bark on this video but, uh, I'm not deducting any part of him for, uh, his expenses for my business. Um, if I owned a junkyard and he was a German shepherd. Yeah, I'd probably deduct some of it. But, um, but for the most part I would say, be very, very cautious before you're claiming as a business expense. Anything related to a pet? Whether that be a dog, a cat or a goldfish. Are there any, uh, a goldfish? That would be an interesting tax detection, Adam. Um, is there a tax deduction or tip that you think people might be missing? Yeah. I mean, in the age of tiktok, everyone wants these fun sexy deductions, you know, like, hey, I'm gonna go to Miami and deduct it. I'm gonna buy a G wagon and deduct the whole thing. Don't overlook the basics. Save for retirement, put some money away tax free in your pocket. If you do have a business and it's earning money, you can put a good amount of away into like a step. Ira. Um, so don't overlook the, the classic standbys, uh, saving for retirement. It's a great way to save on tax. Plus you'll have something to show for it down the road. That's not necessarily the case for a £6000 vehicle. Yeah. Well, I know the IRS is nearly a million people did not claim their 2020 tax returns money on the table. How do you make sure that you do get the money that you need? Yeah. So if you are due a refund for 2020 you have to make sure you get that filed, you have three years from the due date to claim a refund. Um, so if you haven't filed your 2020 maybe you didn't get that stimulus payment, you can claim that as a credit. Um, but yeah, definitely if you have complex taxes might be time to talk to a tax professional. Um, a CPA an attorney, a tax preparer. Um, just to make sure that you are claiming what you're entitled to, but also not claiming anything that is, uh, again from tiktok and probably too good to be true. Yes, I think the IRS might raise a brow or two if they see any talk deductions on their tax returns. Good news is you got more than two weeks to get those tax returns filed. We appreciate it. Adam Brewer, he's a tax controversy attorney.