WASHINGTON, D.C. — The Internal Revenue Service (IRS) has issued a consumer alert about misleading social media claims promoting a non-existent “Self Employment Tax Credit.” Promoters are falsely advertising this supposed credit as a way for self-employed individuals and gig workers to receive substantial payments for the COVID-19 pandemic period.
These claims mirror previous misinformation around the Employee Retention Credit, suggesting that many people qualify for payments up to $32,000 when they actually do not. The IRS clarifies that the credit being inaccurately described is actually the Credits for Sick Leave and Family Leave, a limited and technical credit.
IRS Commissioner Danny Werfel emphasized the importance of obtaining accurate information. “This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday,” Werfel said. He advised taxpayers to consult trusted tax professionals before filing any claims based on social media advice.
The Sick and Family Leave Credits are only available for specific COVID-19 related circumstances in 2020 and 2021. They cannot be claimed on 2023 tax returns. The IRS has noticed repeated misuse of Form 7202, used to claim these credits, by taxpayers incorrectly claiming them based on employee income rather than self-employment income.
To qualify for these credits, self-employed individuals must have been unable to work due to reasons such as caring for someone under quarantine. The IRS has detailed FAQs to help understand these technical requirements.
The IRS warns that the “Self Employment Tax Credit” promotion is similar to the aggressive marketing of the Employee Retention Credit. Both require meeting complex criteria, and not everyone qualifies.
The IRS continues to urge caution. Taxpayers are advised to verify claims with a trusted tax professional and avoid scams. The agency has previously warned about inaccurate claims for the Sick and Family Leave Credits, the Fuel Tax Credit, and household employment taxes, which have led to delayed refunds and increased scrutiny.
Werfel highlighted the ongoing issue: “Scam artists constantly prey on people’s hopes and try to use the complexity of the tax system to convince people there are secret ways to get a big refund. It’s important to carefully review tax returns for accuracy and rely on trusted advice, not questionable sources on social media.”
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