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Spectacular Celebrity Tax Problems

It’s hard for us to conceive of the idea that celebrities have tax trouble. After all, they have plenty of money. Shouldn’t they be able to pay their taxes? Shouldn’t they be able to hire people who make sure they can pay their taxes? The tax brackets [3] shouldn’t trip them up… they’re usually in the highest one!

Celebrities are people, too, and they have some of the same problems and troubles we have. Maybe you forgot to deposit that million dollar check for appearing in that straight to DVD movie? Maybe you forgot the $50,000 royalty check for your show’s syndication last year… eh, we all have those problems. Right? Of course, these troubles tend to happen on a larger scale — just as celebrity wealth is on a scale beyond what most of us will see in our lifetimes.

Here are some of the most surprising celebrities with tax issues:

Of course, many of these celebrities insist that the errors are the fault of accountants. In many cases, celebrities aren’t even in charge of their money management issues. Accountants take care of many financial details [4], including taxes, for celebrities.

However, even if an accountant is to blame for tax mistakes, the celebrities are still personally responsible for their own taxes. Indeed, every year after my accountant finishes with my taxes, one of the papers I sign essentially says that I take responsibility for the results. While my accounting firm will represent me in the event of an audit, the ultimate responsibility for paying the right amount of taxes rests with me.

When there is a shortfall, it can be comforting to think that it’s someone else’s fault. However, you still have to pay the price for mistakes on your taxes. And, there are penalties and interest to pay as well (the IRS starts charging interest immediately).

As you figure your taxes, remember that you need to pay attention to some of the details. While you might not end up owing millions in back taxes, it can still be difficult to pay what you owe. If you have an accountant prepare your taxes, make sure you look over them to ensure that the numbers seem reasonable.

(Photo: nicogenin [5])