Royals face 'tax nightmare' as US officials use Meghan Markle's American citizenship to line up raid on Prince Harry's fortune
The Royal family is currently facing a massive 'tax nightmare' as US officials are reportedly examining whether Meghan Markle and Prince Harry owe them any part of their multi-million-pound fortune.
The Duchess of Sussex still holds an American citizenship and therefore has to pay tax in the US, and this could also extend to others whom she draws money from including her husband. This 'tax nightmare' could end up putting a dent in Meghan's $5million US fortune as well as Prince Harry's main source of wealth and a £300,000-a-year trust fund.
This probe may even extend to the Queen as well as Prince Charles since they provide funding for the pair, as shared by sources to the Sunday Express, according to the Daily Mail report. A source said, "We're looking at a level of financial exposure the Royal Family has never had to face before." The US Internal Revenue Service is known for their diligent tracking of people whom they believe owe them money.
The Duchess of Sussex is currently living in the UK on a family visa but will have issues with her tax status while she is a US citizen. Tax laws suggest that even if LA born Meghan lives in the UK full time, she will still be required to file a US return every year.
Meghan's last tax return would have been submitted to the US authorities by April 17 and would have detailed any money that she and Prince Harry had made since living together. A US tax specialist Alistair Bambridge told Daily Mail, "Of course this raises the tantalizing prospect of Uncle Sam getting a look behind the velvet curtain — and seeing the private finances of the Royal Family."
"Duchess or no duchess, when it comes to the IRS, Meghan is like every other American citizen. Each year she must file her tax return and pay any tax she owes to Washington. The US income tax system is citizenship-based, so as an American it doesn't matter where in the world you live and work — your tax affairs are always Uncle Sam's business," he continued.
"Clearly Meghan's case is a unique one, as she may be taxed according to the rental value of a home she lives in for free — Kensington Palace. Working out the market rental value of a royal palace is not a task for the fainthearted," he added.
Meghan may even be required to declare personal items such as her engagement ring as well as her wedding dress. According to royal watchers, her diamond engagement ring which was given to her by Prince Harry is estimated to cost £71,600 ($100,000). Since it falls under a gift 'from a foreign person' Meghan would have to declare it on a Form 3520 or else pay a £7,160 ($10,000) penalty.
For the longest time, the Royal family's taxes have been under scrutiny. Queen Elizabeth chooses to pay income tax as well as capital gains tax and since the year 1993, her personal income has been taxable just like any other taxpayer. She has always been subjected to VAT and also pays local rates voluntarily.