How to Avoid Tax Problems Like the Chrisleys: 7 Simple Steps for Business Owners

How to Avoid Tax Problems Like the Chrisleys: A Guide for Business Owners and Taxpayers

When Todd and Julie Chrisley, stars of Chrisley Knows Best, were sentenced to prison for tax evasion and fraud, it was a wake-up call for many business owners and taxpayers. They claimed they were innocent, but the court found them guilty of serious financial crimes. Now, they are serving years behind bars.

You may not be a reality TV star, but tax mistakes can happen to anyone. Whether you own a business or just file taxes as an individual, you need to know how to avoid the kind of trouble the Chrisleys faced. In this guide, we’ll explain tax evasion, common mistakes, and simple ways to stay on the right side of the law.

What Is Tax Evasion?

Tax evasion happens when someone illegally avoids paying the taxes they owe. This can include:

• Not reporting all your income
• Claiming fake deductions
• Hiding money in secret accounts
• Filing false tax returns

The IRS takes tax evasion seriously. If caught, you could face large fines, audits, or even jail time—just like the Chrisleys.

Common Tax Mistakes That Can Get You in Trouble

Even if you don’t intentionally cheat on your taxes, simple mistakes can still cause legal issues. Here are some of the most common tax errors business owners and individuals make:

1. Not Keeping Accurate Records

The IRS requires you to keep proper financial records, including receipts, invoices, and bank statements. If you don’t, you could end up paying the wrong amount in taxes—or have no proof if you're audited.

2. Mixing Personal and Business Finances

If you run a business, you need to keep your personal and business money separate. Using business funds for personal expenses (or vice versa) can lead to tax trouble.

3. Underreporting Income

Some people think they can avoid taxes by not reporting all their earnings, especially cash payments. However, the IRS has ways to track unreported income, and if they catch you, you could face penalties.

4. Filing Incorrect or Late Tax Returns

Failing to file your tax return on time or making errors in your tax forms can raise red flags. Even honest mistakes can result in IRS audits or fines.

5. Improperly Claiming Deductions

While tax deductions help lower your tax bill, claiming expenses that don’t qualify can lead to trouble. The IRS may review your deductions and disallow any that aren’t legitimate.

How to Avoid Tax Problems Like the Chrisleys

The good news is that avoiding tax problems is simple if you follow these best practices:

1. Work With a Tax Professional

A tax accountant or CPA can help you file correctly, find legal tax savings, and avoid mistakes that could trigger an IRS audit. The Chrisleys reportedly ignored professional advice—don’t make the same mistake!

2. Keep Detailed Financial Records

Save all receipts, invoices, and financial statements for at least three years. This way, if the IRS ever questions your taxes, you have proof of your income and deductions.

3. Pay Taxes on Time

Filing late or missing payments can lead to penalties and interest charges. Set reminders or work with a tax professional to ensure you meet all deadlines.

4. Report All Your Income

Whether it’s from a side hustle, freelance work, or investments, make sure to report everything you earn. The IRS receives reports from banks, employers, and other sources, so they’ll know if you leave something out.

5. Separate Business and Personal Finances

If you own a business, open a separate bank account and credit card for your business expenses. This keeps your financial records clean and avoids confusion at tax time.

6. Be Honest About Deductions

Only claim tax deductions that are legal and well-documented. If you’re unsure about a deduction, ask a tax professional instead of guessing.

7. Stay Updated on Tax Laws

Tax laws change regularly, and what was allowed last year may not be this year. Keeping up with the latest tax rules can help you avoid costly mistakes.

8. Avoid Get-Rich-Quick Schemes

Some people try to use shady financial tricks to avoid taxes. These include fake businesses, offshore accounts, or other illegal tax shelters. If something sounds too good to be true, it probably is—and the IRS will catch on sooner or later.

What Happens If You Make a Tax Mistake?

If you realize you’ve made a mistake on your taxes, don’t panic. The best thing to do is correct it as soon as possible. Here’s what you should do:

1. Amend Your Tax Return – If you find an error, you can file an amended tax return to fix it.
2. Contact a Tax Professional – If you’re unsure how to fix the mistake, get expert advice.
3. Pay Any Owed Taxes ASAP – If you owe extra taxes, pay them as soon as possible to avoid penalties.
4. Cooperate With the IRS – If the IRS contacts you, respond honestly and provide any requested documents.

The worst thing you can do is ignore the problem. The Chrisleys likely made their situation worse by not dealing with issues early on.