Learn from Celebrity Money Problems

By// Quassan Castro

Tax dodging, bankruptcy blues and money woes have become a trend in the celebrity society. The public embarrassment gains no pity from the poor or working class people who make it everyday with little or no means yet still pay their bills.

Wesley Snipes, who at one point earned millions of dollars from his career as an actor, was released in April from prison after serving 3 years for tax evasion charges. The three-year sentence was prompted by Snipes willful failure to file tax returns from 1999 to 2004. The actor was released from prison though remains on house arrest until July 19. Snipes took a major blow to his career as a result of his incarceration.

While you might think celebrities would have taken a page out of the “Blade” star’s messy tax disaster, think again. Lauryn Hill began her prison sentence yesterday for failing to pay about $1 million in taxes over the past 10 years. With the exception of one song “Neurotic Society,” the singer has barely released any new substantial music prior to the start of her prison sentence.

Toni Braxton has had her fair share of public financial woes.  In 2012, the sultry singer’s Georgia home was in foreclosure. The immaculate mansion was placed on the auction forefront for 1.1 million dollars.  The foreclosure in 2012 marked a second filing of Chapter 7 for Braxton, the artist filed bankruptcy in 1998. Most recently, the

45 year-old diva paid $150,000 to resolve her bankruptcy case.

Former Baywatch pioneer, Pamela Anderson owes over 500,000 in personal income taxes, according to California tax authorities. Anderson was placed on the state’s worst tax miscreant list. In 2013, Lindsay Lohan was issued a lien for unpaid income taxes stemming from 2009.

“The celebrities who have taxes and foreclosure issues are not managing their income properly or they don’t have the cash flow to pay what they owe. They more than likely have a financial manager of some sort, that’s not paying their bills for many reasons. The artist cash flow might be tight. Cash flow might be an issue because they are living above their means. If the cash was in the bank, they would pay.” says Melody Rader, Financial expert and owner of Accountable Solutions.

Maybe you’re not a celebrity, but you don’t have to be for the IRS to come after you. For the non-celebrity society, Melody suggests,

“If you work for a company be sure to have enough taxes removed from your pay. You can also ask for additional taxes to be taken out from your pay in order to make sure you’re up to date with your taxes.” Melody adds, “If you own a company and operate as a business when you’re collecting fees from your revenue source, have 10% of the fees collected going into another account so you can pay your taxes. For an average person, make sure you have a proper tax preparer because they will be able to tell you all the options to maximize on your tax optimization.”

Quassan Castro is a news and entertainment journalist.  Follow him on Twitter @Quassan