Image: TaxBrackets.org

Lindsay Lohan might have received an “A” for behavior on her recent progress report, but she gets an “F” in financial literacy. The former child-star owes nearly $94,000 in back taxes from 2009. MSNBC reported that on Jan. 5 the Internal Revenue Service filed a notice of a Federal Tax Lien against Lohan.

The lien is against Lohan’s Encino home for a whopping $93,701.57, and this isn’t the first time the 25-year-old has made a major financial flub. Previously it was reported that Lindsay racked up $600,000 in credit card debt. Another report claimed she was nearly evicted from her apartment for falling behind on her rent.

If you can’t pay the bill, don’t make the purchase.

Comeback role as Elizabeth Taylor on Lifetime aside, it’s time for Lohan to read up and improve her financial literacy. We’ll help her out:

• Always pay your taxes. And pay them on time!
• Have someone check your return to make sure you’ve paid the proper amount.
• Have a liquid emergency fund (not to be used for shopping sprees or late night partying).
• If you want to live like an A-lister, it helps to be an A-lister. Stop trying to keep up with the Joneses.

Check out why so many celebrities make financial flubs here.

EOnline.com

In our popular Celebrity Financial Mistakes feature, we pointed out Burt Reynolds’s inglorious fiscal past, declaring bankruptcy once before:

After a red-hot career in the 1970s, Burt Reynolds bought himself a helicopter, multiple vacation homes, and a sprawling Florida ranch, but his divorce from actress Loni Anderson left him broke (though he got to keep the ranch).

Unfortunately for him, that ranch appears to be his money curse — because it’s now in foreclosure.

To make matters worse, Reynolds claims he didn’t even realize he hadn’t made a mortgage payment since September 2010, saying in a statement: “I am as surprised as everyone. I thought my career and my life could not be going better. To all of the people who have had such faith in me and stuck by me through thick and thin, thank you. I know it is not the end of the world.”

Considering that he last filed bankruptcy just 13 years ago, it seems Reynolds could use a little assistance in the money-management department — preferably from someone who’s willing to tell him that securing his financial future needs to be more than Gunsmoke and mirrors.

Life.com

Actress and dancer Debbie Reynolds, who’s perhaps best known for starring in Singin’ in the Rain, spent much of her career collecting an estimated 3,500 costumes and thousands more props to create a museum of Hollywood memorabilia. Unfortunately, sinking so much money into her hobby landed her in more than $4 million worth of debt, and a California bankruptcy judge ordered her last fall to auction off items from the collection to pay back her creditors.

Luckily for Reynolds, the court-ordered compromise worked better than anyone could have predicted.

Beverly Hills-based Profiles in History held an auction for select items in the collection last weekend and the proceeds far exceeded projections. The peak of the evening was the bidding war over the iconic white “subway grate” dress that Marilyn Monroe wore in the poster for The Seven Year Itch. That dress netted $4.6 million after commission — more than enough to settle Reynolds’ debts with that one sale alone.

Also among the notable bids were Dorothy’s ruby slippers and blue cotton dress from The Wizard of Oz, which sold together for $1.75 million, and one of Charlie Chaplin’s signature bowler hats, which went for $135,300.

Other auctions were initially planned but the success of this event may be enough to rescue Reynolds from financial ruin. And it provides a good lesson: When you feel completely broke, check your attic or basement for anything you can sell to scratch up enough cash to cover your bills as a short-term solution.

SingersRoom.com

Last October, R&B singer Toni Braxton filed for bankruptcy — for the second time in 12 years. The court determined she owed her creditors — among them Tiffany & Co., Neiman Marcus, and the Four Seasons — between $10 million and $50 million in unpaid debts.

Now Braxton has a reality television show ready to premiere this month, and from the looks of it, she hasn’t learned much from her mistakes:

However, the star appears to have shrugged off her legal woes for the filming of Braxton Family Values, according to the New York Post.

On the program, which premieres on April 12th, Braxton says, “I have a big-a** house, three cars, and I fly first class all around the world. Some say I have the perfect life.”

The trouble is, her track record shows she can’t begin to afford that “perfect life” that she’s bragging about. So much for “taking responsibility.”

Bankruptcy stays on your credit report for 10 years, so she can’t declare she’s broke again until 2020. But we doubt this is the last we’ll hear about her financial problems. Should we take bets on when Braxton will file for bankruptcy for a third time?

FanPop.com

Here at Econ4U, when I catch a celebrity screwing up in a major financial way, I recap the story in our Famous Financial Flubs section. Not because I’m gleeful at someone else’s misfortune, but because it can serve as a valuable lesson for everyday people and help everyone handle their money better.

However, WalletPop columnist Lynnette Khalfani-Cox sees it a little differently. She says celebrities have several legitimate reasons that they so often seem to forget to pay their taxes:

Despite all the bling and the perceived glamor that comes with being an A-lister (or even a D-lister), the truth is that it’s tough being a celebrity and keeping your finances straight. …

So in effect, the IRS might look at a celebrity’s overall financial picture and say: “You’re making $1 million a year, you should have “X” amount of cash flow,” without taking into account that the celebrity has a $7,000-a-month mortgage — not the average $2,000-a-month mortgage, for example.

While she makes a fair point that being rich and famous can put a target on your back for the IRS, I think few Average Joes are going to empathize with someone who’s falling behind on a $7,000 mortgage payment on a multimillion-dollar home in Malibu.

And not all celebrities live beyond their means. I, for one, think The Office star John Krasinski’s 1,279-square-foot, two-bedroom house in West Hollywood is charming, and far more modest compared with the properties other popular television actors seem to be buying up. (Paging Eva Longoria.)

Do you have a lot of sympathy for celebrities who can’t seem to get it together financially?

NBA.com

Just when you think playing for the NBA couldn’t get any better between the insane paychecks and adoring fans, here’s a new perk: If you’re a big enough star, your employer will even pay your way out of trouble with the Internal Revenue Service.

That’s what former Miami Heat point guard Tim Hardaway found out last month when his team bailed him out of tax trouble. By the time he retired in 2003, Hardaway was paid nearly $50 million over the course of his 14-year pro career, but the IRS says he owes $120,748 in unpaid income taxes dating back to 2005 and 2006.

Last year, the tax agency filed a lien against his 7,542-square-foot mansion outside Miami. But the Miami Heat has come to his rescue, buying the home for just under $2 million. The five-bedroom property (complete with swimming pool and private basketball court) is now back on the market for $2.5 million.

Unfortunately, financial illiteracy among pro sports players is nothing new. (This article from CBS Sports describes how rampant bankruptcy runs among retired basketball players, even as early as 5 years after they leave the game.)

If taking care of their own is a priority, perhaps rather than making a habit of bailing former headliners out of trouble, the NBA can focus more of its resources toward money-management classes for current players — before it’s too late.

IMDb.com

Val Kilmer may have played Iceman in Top Gun, but he’s not about to outmaneuver the taxman for the second time.

In April 2010, Kilmer settled a $538,858 tax debt with the IRS. But that wasn’t all he owed to the feds, because in November, the IRS filed a new lien — worth $498,165 — against the actor for unpaid income taxes dating back to 2008.

In jeopardy is the multimillion-dollar Pecos River Ranch that he owns in New Mexico. The 5,300-acre luxury property first hit the market in 2009 with an asking price of $33 million. But with Kilmer now facing another half-million in back taxes, he’s been forced to cut the price to $18.5 million to try to entice a buyer fast.

Moral of the story? Being an entertainer comes with many perks and a big paycheck, but without the most rudimentary good financial habits — like paying your taxes on time and having a liquid emergency fund in case major expenses come up — you won’t be able to live like Batman forever.

XposurePhotos.com

Forget keeping up with the Joneses — in 2010, the worst money mistake you could make is to keep up with the Kardashians.

In mid-November, the celebrity trinity of Kim, Kourtney, and Khloe Kardashian released the Kardashian Kard, a prepaid debit Mastercard marketed at teens and other fans of the reality television stars. Kim described the card as a product that young people could use to “learn their budgets.”

However, the concept met with nearly universal backlash. Parents groups argued that the debit card targets impressionable teens who have probably never used plastic before and may make irresponsible financial decisions. Then Connecticut Attorney General and senator-elect Richard Blumenthal issued a Black Friday warning to parents against allowing their kids to sign up for the card, citing the $99.95 annual fee as well as heavy fees for ATM withdrawals, early cancellation, and calls to customer service.

So yesterday, the Kardashians severed the agreement, citing “the negative spotlight.” As of today, KardashianKard.com has been deactivated.

It’s probably a wise move given that the Kardashian sisters have no business getting into credit counseling. A 2009 episode of Keeping Up With the Kardashians featured an intervention staged by the Kardashian family to address Kim’s shopping addiction, but it didn’t stick: In September, she was photographed spending $100,000 on purses in a single afternoon. The sisters were also sued in 2008 for charging more than $120,000 in unauthorized purchases on an American Express card owned by R&B singer Brandy’s mother. And over the summer, rumors flew that Kourtney is considering filing for bankruptcy, having spent millions on designer clothing, posh apartments, and luxury cars.

The bottom line? Don’t take money tips from people who seem well poised to spend their way into financial ruin.

ToniBraxton.com

However, this isn’t Braxton’s first time in the repossession rodeo. She also filed for bankruptcy in 1998, at which time she also said she didn’t squander her money frivolously:

“It’s my life, and I have to take responsibility for it. People don’t understand this business; a lot of my personal money went into tours. You never get out of the red. Every light bulb, costume, band member, hotel, gas for the tour bus, airplane ticket–everybody has to be paid, and the artist has to pay them. In this business, the product–the artist–pays for everything, and then [we] get what’s left over.”

So how does a talented singer who’s sold 40 million records get tens of millions of dollars in the hole twice? For starters, shortly after her first bankruptcy filing in the ’90s, she signed a lucrative record contract with Arista worth $20 million, which should have gotten her out of debt for good.

But the lesson proved elusive, and she promptly spent hundreds of thousands on a lavish wedding. Braxton returned a leased BMW the last time she went broke, but BMW is once again on her list of creditors. She also has a bad habit of not paying taxes, and earlier this year the IRS filed a lien against her for nearly $400,000. In addition, she has $900,000 in bank loans she has yet to repay, and a $2.6 million home in Nevada that’s in foreclosure. And that’s not counting undisclosed amounts due to Tiffany & Co., Neiman Marcus, the Four Seasons, DirecTV, AT&T, and American Express, among others.

At the very least, we hope the judge overseeing her bankruptcy filing mandates financial counseling before she can simply write off the lifestyle she’s been financing for far too long.

Want more famous financial flubs? Check out our popular 8 Worst Celebrity Financial Mistakes slideshow.

Tax Day has come and gone, but for certain members of Hollywood’s elite, April 15 was just another Thursday. Too bad debt collectors and the IRS don’t see it that way. While these entertainers earn many times the average household income, they are learning now that a lack of financial knowledge can cost them — big time.

1. Nicolas Cage. This Oscar winner isn’t winning any awards for money management: In January, the IRS came knocking for $14 million in back taxes, and the Bel-Air mansion he tried to sell for $35 million was just repossessed by the bank. But all that didn’t stop him from buying a pyramid in New Orleans last week.
2. Pamela Anderson. Nothing can save this Baywatch star from the California Franchise Tax Board’s tax lien to collect $493,000 in unpaid state taxes. And that’s separate from the $1.7 million she reportedly owes the IRS.
3. Nas. Last October, the rapper from Queens was hit with a tax lien of $2.5 million for unpaid taxes from 2006-7, as well as court-ordered alimony payments to ex-wife Kelis to the tune of $55,000 per month.
4. Lindsay Lohan. The former child star hasn’t had a blockbuster hit in years, but she’s still spending like an A-lister. A snitch reported yesterday that Lohan has charged up $600,000 in credit card debt, and was nearly evicted from her apartment earlier this month for falling behind on her rent.
5. Sinbad. This funnyman isn’t laughing now that the IRS has filed a civil suit against him for failing to pay taxes from 1998 to 2006. The lawsuit alleges he owes $8.2 million to the federal government, plus interest, penalties, and legal fees. And it gets worse: The U.S. Attorney General’s office demanded in February that he sell his $3 million home to make up part of the difference.

Want more? Check out our 8 Worst Celebrity Financial Mistakes feature.