Awards season coincides with tax season in America, and as millions of middle-class Americans use the many awards shows to distract them from the tedium of filing their returns, I couldn’t help but wonder how the two worlds intersect.

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After all, rich and famous celebrities pay taxes, too, right — but how? I don’t know any A-listers, so I turned to ChatGPT for insight.

Also see six big ways ChatGPT can help with your 2026 tax filing.

ChatGPT started by explaining that since middle-class earners typically rely on W-2 wage income and the occasional 1099 side stream, they have much less control over their tax structure than rich celebrities, citing Dwayne Johnson, Taylor Swift and Kim Kardashian as highly visible examples who “rarely earn just a paycheck.”

Instead, their wealth comes from various sources. Here are a few:

Business income (LLCs, S-corporations)

Royalties

Licensing deals

Brand endorsements

Touring income

Production companies

Investments (real estate, startups).

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While middle-class Americans typically work for other people’s businesses or might even own their own, household name mega-stars are the businesses that generate revenue through their own loan-out companies, S-corporations, production companies and personal brand LLCs.

ChatGPT used the following example to illustrate how celebrities use their self-branded businesses to control their tax structure.

An actor earns $10 million.

The earnings are paid to the actor’s LLC.

The LLC pays the actor a $1 million salary.

The remaining $9 million is taxed differently.

Conversely, ChatGPT noted that most middle-class workers have no such flexibility because their entire salary is taxed as ordinary income.

Next, ChatGPT explained that celebrities can in some cases claim numerous large deductions that salaried earners and wage workers can’t, which it called a “huge difference” at tax time, before citing the following examples:

Stylists

Trainers

Travel

Security

Assistants

PR teams

Home studios

Wardrobe (if performance-related)

Private jet (business use).

ChatGPT outlined how celebrities use their unique tax flexibility to reduce their obligation to the IRS with the following strategies.

Many wealthy celebs draw much of their income from qualified dividends, long-term capital gains and business equity, which enjoy much more favorable tax treatment than the ordinary income most middle-class earners rely upon.

Numerous A-listers invest heavily in real estate, which they use to offset income through depreciation, cost segregation, property losses and 1031 exchanges.

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This article originally appeared on GOBankingRates.com: I Asked ChatGPT How Famous Celebrities Do Their Taxes vs. Middle-Class Americans: Here’s What It Said