Carnival of Personal Finance #252: Famous People With Tax Troubles Edition

Pay your taxes. Those three little words will keep you out of the hottest of hot water since the Internal Revenue Service won’t tolerate anything less! And no one I know wants trouble with the IRS. With the US tax deadline is this week, I thought I’d highlight some high profile people with tax problems in the past with one of their more memorable quotes. Enjoy the carnival!

Editor’s Picks

Parents Should Teach Kids Finances, Not Just Schools from Frugal Dad. We tend to abdicate that responsibility to teachers and schools, but the best place for kids to learn about personal finance is from their parents. Schools can give them some “book learning” (as we say in the South), but kids need much more. They need parents who will set examples and can help their children learn that finance and economics is all about making wise choices with scarce resources.

Squawkfox presents How to Set Financial Goals – 3 Financial Goals Worksheets. You can always count on Kerry to create a worksheet to help you get better organized. Despite how much I love using YNAB and other financial software, sometimes a good old pencil and paper can help me sort things out much better.

Josh from Rocket Finance presents Top 10 Smarmy Financial Products on TV. How many of these have you seen? When’s the last time you used the word “smarmy?” After reading Josh’s list, I keep seeing all these smarmy things on TV! LOL!

Jeff Rose from Good Financial Cents presents How To Select a Guardian for Your Children. Some of the most important decisions we can make as parents are those that are difficult to imagine. Jeff outlines the process of selecting a guardian for your kids in case the unimaginable happens. It would be much better for your kids if you go ahead and make those choices now.

Mike from Personal Finance Ninja presents Why You Don’t Need to Rush Out and Take Advantage of the Expiring Housing Credit. Mike is also an Economist Ninja! With a series of great drawings and graphs, he shows why that tax credit may not be all it’s cracked up to be.

Ryan from Cash Money Life presents FTC Changes Free Credit Report Advertising Rules. I’m going to miss those funny free credit report commercials but the same company that was targeted by the FTC is now offering a “free” credit score. Make sure you follow Ryan’s recommendation and cancel during the “free” trial.

J. Money from Budgets Are Sexy presents Get Your Cash Flow Up, Baby! Funny how we all think WE’RE the exception to the rule and that we’re completely in control of our money. J. Money challenges that assumption in this great article.

Money Management

At the top of the list only because he is responsible for the IRS and by default, for making sure everyone else pays their taxes, Treasury Secretary Tim Geithner was exposed during his Senate confirmation hearings for failing to pay $35,000 in self employment taxes (I just paid mine!). Ironically, as President of the Federal Reserve Bank of New York, Geithner was required to file an annual ethics statement noting any taxes due or unpaid. Over several years, Geithner failed to pay Social Security taxes, even though he was advised by his employer (The Federal Reserve) to do so, signed an agreement indicating that he understood that such payments were his responsibility and received extra pay from his employer specifically for that purpose. Oddly enough, even though President Obama publicly said that Geithner’s accountant was responsible, Geithner blamed it on a Turbo Tax software glitch. No such “glitch” was ever discovered.

The choice is between which mistake is easier to correct: underdoing it or overdoing it.— Tim Geithner May 30, 2008

I guess when it came to HIS taxes, underdoing it was his choice. Too bad we don’t get the same option.

Kevin from No Debt Plan advises us on Three Tips to Protect Yourself from Bank Failure. Don’t risk losing money if your bank fails. Use these three tips protect your money if it does.
Craig Ford from Money Help For Christians presents Best Personal Finance Software 2010. Software can be a huge help to get the consistency you need in managing your money.
MM from My Personal Finance Journey hit a personal milestone in Finally, A Million.
The Wise Squirrel from Squirrelers wrote 6 Ways to Protect Your Kids Financially. If you don’t protect them, who will?
Bob from Christian Finances presents Should You Buy Pet Health Insurance? Given the political discourse surrounding healthcare, it isn’t a bad idea.
Paula Wethington from Monroe on a Budget shares Recovering from a financial crisis takes time. Time heals all wounds … eventually.
Mr. GoTo from Go To Retirement presents Five Signs of Being Prepared for Retirement. It’s never too soon or too late to think about retirement planning. Here are five signs to look for to tell if you are financially ready.

Finance

Al Capone is probably one of the most well known US tax evaders. Capone’s mob empire was brought to its knees in 1931 because of income tax evasion, not racketeering. Capone spent most of his sentence in Alcatraz, after attempting to bribe and intimidate the jurors in his case. Those jurors were replaced and Al was sent up the river. Though paroled early (what were they thinking?) in 1939, he never was able to revive his influence and died in Florida.

They can’t collect legal taxes from illegal money. –Al Capone

The IRS made sure Capone ate those words.

Evan from My Journey to Millions says that Comparatively Speaking A Million Dollars is Still a lot of Freaking Money. Just ask anyone who doesn’t have a million in the bank!
Mr. Cheap from Four Pillars advises us on The Total Cost of Ownership. There is more to buying just about anything than the price tag.
Mrs. Not Made of Money from Not Made of Money presents How to Recover from a Financial Setback. It isn’t that you got knocked down, it’s the fact that you got back up.
Kimberly Palmer from Alpha Consumer wants to Test Your Insurance IQ. How do you score?
James from DINKs Finance presents You Are What You Read. In that case, I’m one big finance book!
Keith Morris from LifeTuner Blog asks if Overdraft Protection a Thing of the Past? Interesting concept. The US government has been abusing overdraft protection for decades.
Helen from Science And Money presents New Law on Student Loans. The government takes over another industry.

Investing

Charged in 1990 for filing false income-tax returns, baseball’s all time hit leader conveniently failed to report income from autographs, selling memorabilia, and horse-racing winnings. Rose spent five months in prison, paid back over $366,000 in debts, and performed 1,000 hours of community service. Apparently he couldn’t switch hit between playing baseball and doing his taxes.

With the money I’m making, I should be playing two positions. – Pete Rose

Well obviously one of them wasn’t tax accountant.

PT from PT Money asks Roth IRA vs 401K: Which is Right for You? There are many ways to save for your retirement. Here’s more info on the two most popular ways.
Dividend Growth Investor from Dividend Growth Investor presents Three Dividend Strategies to pick from. Dividends are the icing on top of a capital appreciation cake. Yum!
Check out part six in a great series from D4L at Dividends Value: Increasing Dividend Yield Part VI: Time.
Zina from Zina’s Blog presents Investing for Women Starting their Careers. This advice applies to the guys too!
Consumer Boomer presents Best Places to Open and Setup a Roth IRA. Did you know you had so many choices?
2 Cents from Balance Junkie presents 6 Life Lessons from the Stock Market. 6 investing rules that can easily be applied to many other areas of life.
Dan from ETFBase presents Biotech ETFs Hitting New Highs – But Which One to Use?. Biotech ETFs are breaking through all-time highs. Dan examines which ETFs are worth a look and which ones aren’t.
ElizabethG from Modern Gal presents When All Currency Investments Look Bad. Currency investing is a mystery to me, so it always looks bad!

Budgeting

Redd Foxx (aka John Elroy Sanford) was best known for his portrayal of Fred G. Sanford on the 1970s hit sitcom “Sanford and Son.” Later in his life, he fought with the IRS (guess who won) and lost his home in Las Vegas, his furniture, and his household belongings as Treasury agents seized and later sold everything to pay his back taxes. He died in 1991 while working on a new sitcom, still owing over $750,000.

Certain things should be yours to have when you work your way to the top. – Redd Foxx

Yeah, and certain things you worked for actually belong to someone else.

Paul from FiscalGeek presents Real Men Pay With Cash. I prefer to pay with cash myself, but I never knew there were 10 reasons to do so! (Quite a debate going on over there)
Single Guy Money presents I’m Finally Happy With My Budget. Are You? As a matter of fact, I am since I use YNAB!
The Smarter Wallet from The Smarter Wallet presents How To Budget & Save 40% Of Your Income. Yes, you read that right, forty percent!

Saving

Convicted of income tax evasion in 1989, Leona Helmsley, nicknamed the “Queen of Mean,” reportedly was a tyrant to work for. Helmsley served only 18 months of her 16 year sentence. She died in 2007 leaving a $2.5 billion fortune, $12 million of which went to her dog, Trouble. The dog’s CPA is making sure Trouble’s taxes are paid however.

We don’t pay taxes. Only the little people pay taxes. – Leona Helmsley

Ha ha! Little people like YOU, Mrs. Helmsley!

Jim from Bargaineering presents What is a Callable CD?. It’s a great way to get a higher rate but still maintain some safety.
FIRE Finance from FIRE Finance presents 10 Smart iPhone Apps that will Save you Money. I need to use these for my wife’s I phone.
Barb Friedberg from Barbara Friedberg Personal Finance presents The Secret To Saving Without Sacrifice. Selective pruning of expenses is where it’s at!
Michael from The DoughRoller presents Sallie Mae Review. Michael has some of the best reviews out there and this one is no different. Did you know Sallie Mae had a bank?
Jason from One Money Design presents Budget busters: How to save money and control spending for housing. Save money and control spending in your housing category to avoid a budget bust.
Sean from Grow Money presents Savings vs. Debt. Hmmm, should you repay debt with your savings?

Frugality

In 2007 the state of California claimed OJ Simpson owed $1.44 million in back taxes. Since he’s currently in a Nevada prison serving a 33 year sentence for armed robbery and kidnapping, good luck with that collection process.

Money takes wings. The only thing that endures is character. – OJ Simpson

Ironic, don’t you think?

Jaime from Eventual Millionaire presents What Type of Spender Are You? Knowing may help you spend less.
CarMonkey from Car Negotiation Coach presents Do you know how to avoid these 13 car buying mistakes?.
Clint from Accumulating Money presents Tips To Save Money. It all begins with a plan.
Rob from Energy Saving Gadgets presents Save Energy by using Motion Sensing Light Adapters. I need to get a bunch of these for my kids …

Debt

Bud Abbott and Lou Costello were on top of the world during the 1940s and ‘50s, but in 1956 the two were charged for back taxes and were forced to sell most of their possessions, including their film rights. The IRS may have been responsible for their breakup — the “Who’s on First?” creators dissolved their partnership just one year later. Maybe their new gig should have been called “Who’s Busted Up?”

That’s why so many stars are making pictures in Europe today. The tax guys are making thieves out of everybody. – Bud Abbott

You can’t hide in Europe either, Mr. Abbott!

Len from Len Penzo dot Com presents Beware the Four Horsemen of Personal Finance. That Pale Horse is my personal weakness.
Catie from Newby At Home presents Newby Finances 101. Turn your volume up.
FMF from Free Money Finance presents My Credit Card Beef with Dave Ramsey. FMF skewers another “rule” of personal finance and shows you why a credit card isn’t always bad.
Chris from My Debt Relief Options presents Debt Relief Program: Why You Shouldn’t Join One. Learn why joining a debt relief program is a bad idea.

Credit

Finding the National Treasure apparently wasn’t enough for Nicolas Cage. Charged in 2009 with owing $6.2 million in back taxes, this movie star probably can’t come up with it in 60 seconds!

To be a good actor you have to be something like a criminal, to be willing to break the rules to strive for something new. – Nicolas Cage

Yeah, I’m thinking that was a big tipoff for the IRS there Nick.

Michael from The DoughRoller presents The Pros and Cons of Credit Cards and Charge Cards. Charge cards are making a comeback, but you really need to know all your options and the pros and cons.
Paul Williams from Provident Planning presents The Credit CARD Act – A Summary. It pays to know your new rights.
Craig/FFB from Free From Broke presents Different Kinds Of Bank Cards. Did you know there were 4 different types of bank cards?
Julie from Taking Charge presents When was easy credit really affordable?. I dunno, my neighbor got a credit card in her dog’s name a few years back! But her point is sound: “It has always been expensive to be poor; credit cards and easy credit just made you appear to be less so.”
Sweating The Big Stuff presents The Correlation Between Debt and Credit. Frankly, I was surprised by the findings. I think you will be, too.
Kris Bickell from Debt Tips presents The 5 truths (and myths) I learned the hard way about fixing credit problems! Yeah, there ARE a lot of myths out there, but you can do something positive for your credit, even if it’s bad.

Reviews

For crying out loud, if you win big money on national television like Richard Hatch did on the first season of Survivor, you better pay your taxes. Hatch was sentenced to 51 months in prison and then three years of supervised release as a result. I wonder if he celebrated his four birthdays in prison the same way he did on the show.

I’ve to this day never had an assessment. – Richard Hatch

Hey Rich, you got a million bucks. THAT’S your assessment.

Mike Piper from IRA Reviews presents Charles Schwab IRA Review.
Silicon Valley Blogger from The Digerati Life presents Use BigCrumbs To Earn Cash Back When Shopping Online. SVB reviews a cash back shopping site.

Real Estate

The IRS filed a claim against Wesley Snipes after he failed to file taxes from 1999 through 2004. His reasoning? He claimed to be a “non-resident alien” of the United States. Wow. Hard to believe that a kid born in Orlando and raised in New York is an alien. I would believe him if he showed up in a flying saucer however.

I have a whole other side that has yet to be seen on screen. – Wesley Snipes

Would that other side involve tax law?

Kyle from Amateur Asset Allocator presents How To Calculate Your True Mortgage Interest Rate. How much house do you have to buy to make the mortgage interest deduction worth it?

Taxes

Even though he made $15.5 million between 2000 and 2004, Marc Anthony (aka Jenifer Lopez’s husband) failed to file taxes and as a result, was hit with an order to pay $2.5 million in back taxes. That’s only a 16 percent tax rate. How do I get in on that deal?

Fame is addictive. Money is addictive. Attention is addictive. But golf is second to none. – Marc Anthony

I understand that staying out of prison for failing to pay your taxes is pretty addictive as well.

Peter from Bible Money Matters presents First Quarter Estimated Tax Payment Is Due On April 15th. Make Your Payment Now! I think the people featured in this post would probably agree … now.
Elle from Couple Money presents Make Your 2009 IRA Contribution! There is still time … before April 15th!
Jill from My Dollar Plan presents Claiming Dependents on Your Tax Return. The “ins and outs” of how to claim a child on your tax return. There may be more rules than you think!
Matthew Sumpter from Life Of An Investor presents Are you the 1 out of 2 who pay US taxes?. From “love thy neighbor” to “mooch thy neighbor?”
Tim Chen from NerdWallet Credit Card Watch presents Do Not, Repeat Do Not, Pay Your Taxes With a Credit Card. Yikes.
CTreit from Money Obedience presents Yippee, We Got A Tax Refund! Yeah, me too, even though I file married with 10 dependents to avoid getting one!
Andy from Saving to Invest presents Can’t Afford To Pay My Taxes and How to Get an Extension. Just remember that an extension to file is not an extension to pay. There is a difference!
Darwin from Darwin’s Finance presents My Effective Tax Rate is 5%. That’s Just Wrong. Whoa — I just paid almost $30,000 in taxes. My effective rate is somewhat larger than 5% …

Career

The USA isn’t the only country that has tax evaders. Sophia Loren served 17 days of a 30 day sentence in a Naples prison in 1982 for tax evasion. Those charges were related to allegations that her husband, Carlo Ponti, underpaid his taxes in previous decades. Unfortunately for Sophia, unlike the USA, Italy apparently had no Innocent Spouse provision.

Getting ahead in a difficult profession requires avid faith in yourself. That is why some people with mediocre talent, but with great inner drive, go so much further than people with vastly superior talent. – Sophia Loren

Great quote. Use your talent to find either an average accountant or a great tax lawyer (the accountant is cheaper).

Ryan from Military Finance Network presents Military Members Have it Too Good and Whine Too Much. Ryan is a veteran and knows his stuff. This post is a response to a comment on his blog and is worth the read.
Pop from Pop Economics presents Why do we work so much?. In the 1950s, economists predicted that by now, we’d only be working a few hours a day or a few days a week. That didn’t happen. Pop explores why and what options we have to grab a little bit of our time back from our employers.
WellHeeled from Well Heeled Blog presents Graduate School: (When) Should I Go?. Graduate school requires a big financial and time commitment. Here I detail 3 questions to ask to make sure you’re making an informed decision.

Economy

Famous funny man, Sinbad (aka David Adkins) was hit up in 2009 with a $2.5 million tax bill going back to returns he filed since 1999. Not only that, but he was listed in the top 10 of California’s worst tax offenders. The tax man always gets the last laugh – reportedly, Sinbad’s home is up for sale in order to pay his tax bill.

If you`re not happy before you`re successful, you`re going to be miserable when you do become successful because all your problems just get magnified. – Sinbad

I agree – especially when it comes to your TAX problems!

Carson Brackney from Personal Finance Analyst presents The Benefits of a Recession… No, Seriously. Some of the biggest, most successful companies were founded during the Great Depression.

Other

Legendary silent film star, Buster Keaton owed the IRS $28,000 in 1933 (that converts to almost $500,000 today). Fame apparently had a devastating effect on his finances and he tried to drown his troubles in alcohol. After he was admitted to a mental hospital, he DID pull his life together, escaped from a strait jacket and married his nurse (wow, what a story!). He returned to film though he never fully rebounded to his former success.

Life is too serious to do farce comedy. – Buster Keaton

Paying your taxes is serious, though.

Dustin from Engaged Marriage presents Prenuptial Agreements; Good, Bad or Just Plain Ugly? Personally, I think they’re ugly, but then again, my wife and I agreed a long time ago (over 20 years) that divorce wasn’t an option … ever.
Olivia from Independent Beginnings presents Common Health Insurance Terms Explained. A great glossary of the terms used in the insurance business of healthcare.
FT from Million Dollar Journey presents The Fear of Money. Don’t be scared. Money doesn’t bite!
Alison from This Wasn’t In The Plan presents Why There Will Be No Chore Chart. But there will still be an allowance!

Photo Credits

Pete Rose photo by Kjunstorm
Sanford and Son Photo by Blog Talk Radio
All other photos were so prolific that it was difficult to know who to give credit to. If one of these is yours, use my contact form to let me know and I’ll certainly give you the credit and the link!