It is not only the general populace that is required to pay taxes, but celebrities and the super-rich are also not immune to the demands of the IRS. Many celebrities end up with millions of dollars in tax debt due to various reasons. The equation is simple: the higher the income, the higher the tax liability.
Avoiding trouble with the IRS is a priority for those who find themselves making more money. They need to keep an accurate record of income received from any and every source. They can consider tax breaks that are available to them to save on taxes, without having to use tax havens and offshore bank accounts to evade taxes owed.
Tax Defense Network Salary: High Income & Tax Debt
Those who earn more than most people may need to pay more to the IRS in terms of tax debt if there are inaccuracies in filing taxes or if the taxes are not filed at all. Celebrities can get into tax debt to the tune of millions, which is difficult to pay even for them. The IRS has been known to place a wage garnishment or a lien on celebrities to fulfill a tax debt.
The earnings of the rich run into millions, so it is no wonder that their tax debt crosses the million mark very quickly. Add interest along with IRS penalties, and it is enough to skyrocket any amount of tax debt. Even with money to spare, it is advisable not to take taxes lightly.
Most times, it is a missed filing deadline that creates a tax debt, and that debt slowly begins to increase, making it difficult to pay. Although you might be financially strong, it always hurts to pay more in taxes. To avoid getting into tax debt, celebrities and the rich may need to be more careful filing taxes and, equally importantly, accurately file their taxes.
Tax Defense Network Salary: Paying Tax Debt
Most taxpayers choose an Installment Agreement, which is an IRS debt payment plan, to pay their back taxes. Those who cannot afford to pay their back taxes due to financial hardship file for a debt reduction plan, or an Offer in Compromise. However, because celebrities and the rich have many assets and high income, very rarely will their tax debt be reduced.
In cases of non-payment, the IRS moves to a lien or levy. These are aggressive collection actions allow the IRS to seize and/or sell a taxpayer’s assets, freeze and withdraw money from their bank account(s), or garnish wages. Postponing the payment of tax debt is not a solution; paying the debt is.