BBC News – Prince Harry 'thrilled' to marry girlfriend Meghan Markle next year – It's "tax colonization through marriage" https://t.co/Y8xrH1mVnJ
— U.S. Citizen Abroad (@USCitizenAbroad) November 27, 2017
The mainstream media along with Isaac Brock poster “Mike” informs us:
“Breaking news!: With the upcoming marriage of Prince Harry with an American, the British Royal Family will now have to pay American taxes.. Maybe somebody in the government will wake up at that point. Meghan Markle is too rich to renounce without getting an unaffordable exit tax.”
And I bet they both have no idea.
Without Ms. Markle renouncing U.S. citizenship, it would seem that Ms. Markle will give the IRS a port of entry into the finances of the Royal Family. Think of it:
“Tax Colonization through marriage!!”
Clearly both Prince Harry and Ms. Markle need advice. In your comments could you please give them your best wishes and a bit of advice.
What should Prince Harry do?
What should Meghan Markle do?
What should the Royal Family do?
@Mike
There is absolutely no requirement for any joint filing in any year. If you have a source please provide it.
As UsCitizens abroad stated if Harry is the owner of any foreign corporations, than Megan will have a 5471 information return, not something her CPA wont be abke to handle.
Plus gift giving is a two-edged sword. To the tune that the new princess can gift her husband $150,000 per year up to the point where her assets are under the exit tax threshold.
@Nononymous
Although you are probably right on your facts, I doubt very much that the facts you give (U.S. connected income) is the reason Boris paid up.
The reason he paid up is because he was a dual citizen from birth and therefore was NOT subject to the Exit Tax if he was 5 years compliant. He paid (a relative pittance) so that he could certify the 5 years of compliance and renounce while avoiding a (likely massive) Exit Tax.
If he still had owed U.S. taxes he could not have met the compliance test, would have been a covered expatriate and would have been subject to the Exit Tax.
“There is absolutely no requirement for any joint filing in any year. If you have a source please provide it.”
I’m not looking for it now, but it was not my imagination that lead me to read that the first year of married filing had to be done jointly.
Mike, I don’t understand your statement “the first filing has to be done jointly”.
I have NEVER filed jointly with my (foreign) husband, only my own earnings and personal bank account. None of his earnings and possessions/accounts have been declared to the IRS. It may be uncomfortable and risky not to have any joint accounts, but that is how we cope with IRS.
There is no reason why Meghan cannot keep her US bank accounts and declare them to IRS, and her UK husband can have separate accounts, not reported to IRS.
Boris paid up because political reality meant he could not refuse, that’s all. Tax cheats don’t do well in politics, certainly not those who wish to be prime minister.
@USCA
What I recall – and I don’t want to sidetrack us here – is that Boris was sputtering about refusing to pay US capital gains on the sale of his London house. He could easily have told the IRS to go hump itself, not filed any returns, and renounced anyway, exit tax be damned. But he probably chose compliance because public defiance of US law might have been awkward for his political career (a laughable assumption given the gang currently in the White House) and because he had US income sources (royalties and fees) he didn’t want to lose. I’m sure he cut a decent deal with the IRS, it wasn’t in their interests to have him mouthing off.
When I arrived in Canada as a permanent resident in 2004, I was totally unaware of US tax law regarding US citizens living abroad. When I arrived in Canada, I considered myself to be Canadian and paid taxes in Canada. Became a Canadian citizen ASAP. Citizenship based taxation was not even on my radar. I was in my 50’s at the time.
One would wonder if Harry and Meghan, at their young ages, have FATCA and CBT on their radar at all?
@patcanadian
Harry and Megan may not be aware but I am sure the Royal accountants will be, also Coutts the Royal bankers when Megan opens her new UK accounts.
@Mike
You are probably refereing to IRC 6013(g) where an american may choose to treat his NRA spouse as a resident for tax purposes. The operating words here are “may choose”.
If the choice is made than the first year a joint return needs be filed.
@yaacov
What about the tax on the gain from the sale of a royal residence. I am sure the Queen would ‘not be amused’ to see the sale of any past wedding gift being taxed in the USA.
Yacoov….It might be. I don’t claim to be an expert, just repeating what I read.
Nonymous – That’s exactly what happened with Boris. And I am sure you are correct that the IRS made it as easy as possible for him to comply, they don’t need the bad press regarding stealing from other nations.
@Heidi
Even in the event where they don’t use one of the many royally owned real estate establishments, and actually go out and buy one together, they would only get taxed on Megan’s half of the gain (if it is over the $250,000 exclusion).
Any real estate already owned by the crown will not be taxed if sold, even if Markle lives there, unless the crown gives her the actual deed to the house. Doubtful.
Fergie and Andrew were given a new house as a gift from the Queen, that was later sold. Megan and Harry are now looking in Wiltshire to buy a house. Do you think that it is of little consequence that the Royal purse should be liable to support the USA?
@Yaacov
In your next life you should back as a CPA. You describe the situation beautifully, but with no sensitivity to the reality. Yes, her CPA will be able to handle the 5471. In fact, her CPA will be able to handle all aspects of her U.S. tax compliance. But, that’ not really the issue, is it.
Let’s imagine this scenario, in the first few months of their royal marital bliss:
Meghan:
I love living in the U.K. here with you. It’s like a fairy tale. I always imagined a life of royalty. But, I still must remember and be loyal to my American roots and my American country.
The Prince:
Yes, I always admired your character and your loyalty to your Homeland is proof of that. But why are you thinking of this today? We our royal life in England to think about.
Meghan:
Well, what it means to be American is first and foremost to pay taxes. You may take your instructions from Queen and Country. But, I take my instructions directly from the IRS. You see, U.S. citizenship is a special kind of citizenship. It’s the worlds’ only PURELY “taxation-based citizenship”. As a good American, I think about my taxes.
It’s June 1 and I thought I could get my U.S. tax return in by June 15.
The Prince:
Sounds good! Are you suggesting that you can’t get them done by June 1? What’s the problem? If you need help, we can summon my royal “Tax Butler”.
Meghan:
Well, the problem my dear is that my marriage to you (suggesting it’s his fault) has made my tax filing with the IRS, more complicated. My U.S. CPA tells me that I have to file extra forms this year only because you are NOT a U.S. citizen!
The Prince:
Really, now what would those be?
Meghan:
Well, I have to file a special IRS form that discloses details to the iRS of every single one of your U.K. companies?
The Prince:
What (WTF)………………….!!! I am not liable for taxes to the USA.
Meghan:
Yes, my dear. I know. But I am subject to IRS rules. Apparently their is this strange attribution rules that makes me the owner of ALL of your companies (even though I don’t really own a single one – well, yet …)
And to be perfectly clear: My primary loyalty is to the IRS and NOT to my husband!
The Prince:
WTF!!!! You never told me any of this prior to our marriage.
Meghan:
Well, there’s a lot I didn’t tell you. You may know me as Meghan. My fans might know me as Meghan.
But, you see the IRS knows me as something else.
The Prince:
And what would that be.
Meghan:
Welcome, to your worst nightmare!
The name’s Markle. “Special Agent Markle”. I am here to help you (forcibly) disclose all of your assets to the IRS!
I may have married into royalty. But you married into an FBAR Marriage!! It’s the U.S. policy of “colonization through marriage”. You see, at one time England had 13 colonies in America. Now, that you are married to me, America will start with one colony in Europe. And you and I are here to make it happen!
@Heidi
It will certainly be interesting to see how the Royal accountants and Royal bankers handle this one.
Also how the IRS deals with the new Royal US Person.
I guess I just empathize with anyone walking into the FATCA trap.
@USCitizensAbroad
Thank you for that. I was laughing for a good while 🙂
Obviously CBT raises a bulk of issues that any sane human would never imagine.
Just heard a BBC newsreader ask the Royal correspondent
“What do you think Meghan will bring to the Royal Family? ”
My spouse just shouted from the kitchen
“The IRS!”
I’m sure the royals have financial advisors looking after all of this. She might even be required to relinquish all foreign citizenship’s before becoming a royal.
@Marie
That would be expensive for her and what if the marriage didn’t survive, (3 out of 4 of the queens children’s didn’t).She would then lose the ability to return to live in the US.
Harry (and the royal family) will never get tangled up with the mess in the USA. I read a few news articles a while back where her citizenship was brought up (not about the tax) but about her citizenship. She is to become a British Citizen when she marries Harry. fast tracking her may anger people so i read that the route will be to get Canadian first (she would qualify and I can’t see her being rejected) and then it will be easy for her to get British Citizenship after.
She will renounce American citizenship at the same time she acquires either Canadian or UK, which ever first. she will not have to but i guarantee she will and it will be kept quiet.
they will never get tangled into the mess normal people get tangled in. and if they do only for a short while. I am sure the children if any will only be UK citizens.
actually it is relinquish (not renounce). she will relinquish when she takes the new citizenship. this has already all been planned before the announcement. she will willing to quit her career for Harry and i am sure she will be willing to relinquish US citizenship as well if its a requirement.
This may be the best event for our cause against us citizenship based worldwide taxation !
Harry is Prince of Wales and, if speculation is correct, will receive the title Duke of Sussex upon his marriage. Which means Meghan becomes, in effect, co-owner of the Principality of Wales and the County of Sussex.
When she presumably renounces US citizenship as a covered expatriate, she will have to declare her imagined capital gains over both those regions. Otherwise, would the IRS assert its authority to confiscate, say, the city of Brighton?
Heidi: “That [renunciation] would be expensive for her and what if the marriage didn’t survive, (3 out of 4 of the queens children’s didn’t).She would then lose the ability to return to live in the US.
Oh noes! Then she’d have to live with being a UK citizen! And then if Harry becomes king, she’ll owe allegiance or fealty or whatever they call it to her ex!
Hope Cooke renounced in order to become the queen (gyalmo) of Sikkim, which was then forcibly annexed by India (in 1975). The US let her have her citizenship back. It was, after all, a special case.
Oh well, at least they can write off their losses from Brexit.