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Habits That Will Keep You Out of Tax Trouble

Habits That Will Keep You Out of Tax Trouble

By on Jul 19, 2016 in Filing Taxes | 0 comments

irs 1040 forms on top of $20 dollar bills

The early 90s rapper MC Hammer became famous off of his hit song, U Can’t Touch This, but the Internal Revenue Service (IRS) proved that they could! In November 21, 2011, the United States Government filed a lawsuit against the rapper for unpaid taxes during the years of 1996 and 1997. It is estimated that he owed over $800,000 in back taxes. Maybe he was too legit to quit? The real question is: What could MC Hammer have done differently to avoid his tax woes?

Here, we give you a list of habits that you should practice in order to keep yourself out of tax trouble.

  • Understand How Taxes Work

People often get the concept that taxes are just the extra money that you are charged when you make a transaction, but people often do not know that there is just more than Sales Tax. You have the Payroll Tax, Income Tax, Capital Gains Tax, and a Property Tax. The Payroll Tax is collected out of your paycheck, and it contributes to the state that you live in as well as the federal government. (Did you know that Americans overpay the government by $945 million every year?) This is often refunded to you through your Income Tax.


It’s important that you get into the rhythm of filing your taxes every single year. It’s important that the government knows your income. Trying to reduce your tax liability is not easy, almost impossible, but do not hide what you make. According to the United States government, that is considered Tax Evasion, and can be punishable up to 5 years in prison. You can read all about it here.

  • Make An Arrangement

If you cannot pay for the taxes that you owe, arrange to make a payment plan . This is the easy way and it’s the first step to assume the responsibility of paying back the taxes that you owe. This is crucial because it can establish credibility with the IRS. Do not be late when filing your tax return. You’ll avoid penalties this way. Then, consider the options: there is the IRS Direct Pay, extensions, monthly payment plans, and you can even compromise!

  • Know How Much You Owe

As mentioned above, the payroll tax is a lifesaver. This way, the employers withhold taxes from your paycheck so you can pay your income tax as you go, and you can receive a nice refund during tax time. As for an entrepreneur, this may be very hard on you, as you have to know how much you owe in order to stay on top of things. If you file and the IRS says that you are underpaid, you can be subject to a penalty. The goal is to possibly look at last year’s tax return to get an estimate for what you might owe for the current year, and keeping tabs on payments you may have already made this year.

Get Started

Success Tax Relief is an accredited business that has spent over 30 years solving consumer and business tax debts, and has a list of audit representation services. You can view all of services we offer here. Our staff is available 24/7, so if you have any questions or concerns, be sure to contact us by phone at 1-877-825-1179 or email us online!

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