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Finance Experts Warn Americans Not to Believe TikTok Financial Advice

Financial experts remind Americans not to believe tax and financial advice on TikTok.
Financial experts remind Americans not to believe tax and financial advice on TikTok. (Photo: Getty Images)

TikTok is social media from China that hosts user-submitted videos. Thanks to its easy-to-use video creation tools, there was a massive increase in its users. The Guardian said the platform has also created a proliferation of creators with content ranging from health and fitness to financial and tax advice.

TikTok contents are usually not moderated, making it vulnerable to spreading fake news. Rebecca Chen of Yahoo Finance said more Americans are getting advice on financial matters, like filing taxes, from TikTok and other social media.

According to Yahoo Finance, #taxes, and #emoney have been ranked third and fourth on the financial services chart on TikTok. The IRS has also generated 41 million views on its tax-related content. Most of the popular videos related to finance are about “deductions you didn’t know” or “secret tax tips.”

Also Read: 82-year-old Walmart employee working on store floor with cane to pay her bills, until viral TikTok video helped her raise over $130,000 

Gregory Kling, associate professor at USC Leventhal School of Accounting, expressed his frustration with Yahoo Finance due to the widespread fake news on TikTok. For instance, some contents say that a car can be used as a tax expense to deduct 100% of business entertainment expenses, which is incorrect as the only deductible is food.

Oversimplification

TikTok videos usually range from a few seconds to 10 minutes, resulting in oversimplifying some topics.

For instance, one influencer showed a business meal receipt of over $50 he planned to write off, and another shared that he could deduct a $125,000 luxury vehicle for business purposes. These scenarios could be legitimate deductions; however, it does not work for everyone.

Financial experts say anyone can be an ‘expert’ on TikTok; some influencers are proliferating fake news as they oversimplify some tax and financial concepts.

Financial experts say anyone can be an ‘expert’ on TikTok; some influencers are proliferating fake news as they oversimplify some tax and financial concepts. (Photo: CNET)

Anyone can be an ‘Expert’ on TikTok

CNET reports that some influencers are sharing the wrong information about taxes and finances, which is completely wrong. Most influencers tend to give general information, which is dangerous as they might skip some important specifics. Furthermore, some financial advice might not apply to everyone’s financial situation.

Find Out: 5 Ways to Avoid Paying Taxes “Legally”.

More: Living in a State With No Income Taxes: Advantage and Disadvantage

Fake News

Some influences are also giving advice that is straight out wrong. Grant Dougherty, a founder of the Dougherty Tax Solution, shared that some creators are talking about transferring real estate gains to cryptocurrencies. The IRS has already rejected cryptocurrency as a property in 2021.

Taxpayers, particularly lower-income individuals, usually turn to Google or other social media platforms to help with their financial queries.

Read More: Learn to Navigate Your Financial Fears 

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