Meghan Markle could be in for a big tax hassle if, say, an IRS audit exposes her and the royal family to financial scrutiny, the New York Daily News reported, begging the question of whether she should keep her U.S. citizenship.
After Markle marries Prince Harry on May 19, it could take “a number of years” for her to become a legal British citizen, a Kensington Palace spokesman said. Markle, who was a reported net worth of $5 million, already could find herself giving up financial details of the royal family while paying U.S. taxes, the Daily News said.
“Friends are encouraging her not to give up her American citizenship,” the Daily News reported. “That doesn’t mean she wouldn’t.”
The newspaper said Markle’s dual citizenship could be subject to an IRS audit, in which she would have to disclose the value of gifts and allowances from the royals, including the tiara she is expected to wear on her wedding day.
David McClure, author of the book “Royal Legacy: How the royal family have made, spent and passed on their wealth,” told The Independent last November that the British royals’ finances have long been “impenetrable” to outsiders.
“I’ve been truffling in the royal coffers for seven or eight years,” McClure said, adding that no one really knows how wealthy the royals are. “I suspect the queen doesn’t know.”
The Independent said if Markle does maintain her U.S. citizenship, royal children could make taxes even more complicated.
“Parents cannot elect to have a child lose his or her U.S. citizenship, so the children will be U.S. citizens (and therefore, US taxpayers) unless they decide to give it up when they reach the age of majority,” Kristin Konschnik, an attorney with London-based Butler Snow Law Firm, told The Independent.
And if Markle does give up her U.S. citizenship, it could cost her 30 percent of the $5 million net worth in form of an “exit tax” or “expatriation tax,” the Daily News said.
CNBC said that renouncing U.S. citizenship for tax purposes has proven popular for 5,411 individuals who did it in 2016, a 26 percent increase from 2015. The network said entertainer Tina Turner and Facebook co-founder Eduardo Saverin went that route.
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