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9 May 2017

Embarrassing Celebrity Tax Mistakes

Embarrassing Celebrity Tax Mistakes

Celebrities can certainly make mistakes with their money. Two of the most common mistakes that involve the IRS are tax evasion and poor estate planning. One is a failure to assume responsibility and hope the IRS doesn’t notice while the other is based more on ignorance of what can truly happen to your assets (and how much can be lost to the IRS) after you’re gone. Marilyn Monroe, Willie Nelson, Wesley Snipes and others have fallen victim to these mistakes and they (or their families) have paid the price.

Here are others:

  • Rapper Nas is slowly learning a harsh and public lesson in personal finance. He recently settled a $3.6 million federal tax bill for back taxes from 2006 to 2010 but it’s said that he still has a tax bill of $426,000 owed to the state of Georgia.
  • Singer Sammy Davis Jr. left behind a generous will but he also left behind such a large tax bill ($5.3 million) that his estate was in turmoil for years. His widow faced liability for the tax debt because she had filed and signed ‘married filing jointly’ tax returns. 
  • NFL quarterback Steve McNair died with no estate documents in order, which led to his assets being tied up in probate. Meanwhile, his mother was displaced from her 45-acre, six-bedroom home (which he had purchased for her) and his widow had to petition the court to gain access to $3.7 million used only to pay a massive tax bill.
  • The fate of Michael Jackson’s estate is currently being litigated in court. There are several things at issue. First, the IRS claims the estate owes more than $700 million in taxes and penalties. Second, there’s disagreement about how much Michael Jackson’s name and likeness are worth. The estate places their worth at a paltry $2,105 since, at the time the documents originated, his reputation was marred by child abuse allegations and strange public behavior. The IRS puts the value of his name and likeness at $434 million. That’s quite the difference.

While most of us don’t make millions of dollars, tax evasion and poor estate planning could be just as devastating to your livelihood (or your family’s). Feel free to contact us for questions.

Image Copyright: narmadagharat / 123RF Stock Photo

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