The classic adage is that a fool and his money are eventually parted. It shouldn’t be astonishing that with the plethora of fools populating reality television in the new decade, that more and more of them are being confronted with penalty charges and fees by the U.S. government as a consequence of delinquent taxes and IRS tax debt.

Most recently, Celebutante Khloe Kardashian had a tax lien placed against her by the state of California. The $18,000 tax lien goes back to 2007. The recently-wed star better eliminate it quick mainly because California is a community property state, for example, Whenever a couple gets married, all property and debt are shared. Unusually, 2007 was the year that Khloe originally came to reality Television in “Keeping Up with The Kardashians”.

You might possibly be fascinated concerning why reality television stars are more likely to have to tax problems. The predicament runs back to the basic fact that, in particular in game television shows like American Idol and Survivor, winners accept sizable, lump-sums of cash. Although it should be a no-brainer that any charges to a top broadcasting organization will be submitted to the government, the vast majority of brand new reality television stars don’t recognize the document they get at year’s end about their income is not a W2, but a 1099, and they must pay up the 15.3 percent self-employment tax up front. If you’ve never had to deal with a filing as an independent contractor (1099 misc), the surprise of having to pay the expensive self-employment tax may be jarring.

Another, fairly new, tax issue that reality celebrities will come upon is the swag tax. “Swag” (Stuff We All Get) and gifting suites are tremendous in Hollywood. Organizations will hand out hundreds of thousands of dollars worth of items and services wishing that seeing the Hollywood stars in their items. Bags may range in price from $27,000 to $100,000 a piece. For a new reality TV star, who wouldn’t desire a complimentary bag rich in trendy goodies? Lately, the Internal Revenue Service has commenced cracking down on the “free” aspect. Each time a celebrity obtains a swag bag, they’re now responsible to sign a letter informing that they recognize that it is really revenue.

Imagine starting your fifteen minutes of fame, being taken from one award ceremony to the next, amassing swag bags just as if you were trick or treating. Do you actually suppose your mind would be focused on the taxes you might have to repay in a year? Reality stars like Ruben Studdard, Blake Lewis and Michael Skupin have all had the federal government come down on them about tax debt.

The Winner of the first season of Survivor, Richard Hatch, honestly devoted over 4 years in locked up for avoiding his taxes. Hatch had never filed income taxes for the $1.1 million he got on Survivor or $321,000 he got for several broadcast performances in Massachusetts. Hatch filed a number of appeals in an endeavor to scale down his jail term however he wound up serving the total sentence.

Author Bio: Stars such as these may pay attention of the “reality” of the situation: Whenever you tangle with the IRS, you might possibly end up dealing with predicaments that are a whole lot tougher than ingesting rodents or “immunity challenges”. For further info with regards to tax liability, and what exactly the IRS is capable of, visit IRS Tax Settlement HQ .

Category: Finances
Keywords: irs tax debt,tax lien,reality stars