T.I. & Tiny’s Tax Lien: How does this happen?

2B8751C000000578-3205067-image-a-18_1440092315199One of our favorite rappers T.I. & his wife Tiny were hit with a tax lien! ::Gasps:: But do you know what that really means and how to avoid it once you you start making your millions?
There were two tax liens filed against the King of the South and his wife. One from 2012 in the amount of $1,397,283.47 and another from 2013 for $3,173,476.39, totaling over $4.5 million in unpaid taxes. However T.i. is estimated to be worth more than $215 million so this tax bill should not be a big issue for him. So let me help you understand what all of this means.

How did this happen!?

Celebrities seem to get hit with these tax liens pretty often. I do not know their specific reason why, but this can be from straight up ignoring the correspondence from the IRS or having bad accountants, which is often the issue. If you are hiring an accountant or tax professional to work on your taxes, make sure to still be very aware of your financial status with the IRS, if you owe anything and review your taxes to ensure the information that is being reported is accurate.

What is a tax lien?

A tax lien is when the federal government places a legal claim on your property for unpaid taxes. This happens after the government has determined the amount that you owe and sends you a bill for this amount. If you fail to pay the amount by the due date a lien can be placed against your property, real estate and other assets. For example if you have a $50,000 tax lien against your house and when you sell the house, the government will get the $50,000 first and then you will receive any money that is left over from the sell of the house.

How to avoid a tax lien.

It’s actually pretty easy to avoid a tax lien. All you have to do is file and pay your taxes on time. If for some reason you cannot pay your tax bill you can contact the IRS and work out a payment plan to satisfy your debt and avoid the tax lien.

Remember no one knows your financial situation better than you, no matter how much money you have always keep a close eye on your personal and business finances!

Ready to learn how to take control of your finances, check out our Finances De•mys•ti•fied Bootcamp