When American actress Meghan Markle suddenly became engaged to Prince Harry about a month ago, rumors swirled that she was only after him for his money. If that is indeed the case, however, Markle was just hit with a brutal wakeup call as a loophole means she likely won’t be sharing his royal fortune for quite some time.
News.com reported that Harry will probably not be sharing his fortune with Markle after they get married because she’d be stung by American income tax. Though Markle intends to become a British citizen after the marriage in May, she can only become naturalised after she’s lived in the UK for three years.
If Markle does not renounce her American citizenship, she will have to continue paying tax to the United States’ Internal Revenue Service (IRS).
“Even when married to a member of the British royal family, as long as she remains a US citizen she will have to pay income tax,” said royal expert Marlene Koenig. “If she has investments in the United States, say for example a retirement plan that she set up, if that’s making money, she would have to pay up. This is even on money earned outside the United States. If she receives money from her husband or his family, and that’s considered income, she would have to pay income tax on that.”
This could turn into a major pain for the British royal family, as if she has more than $382,000 (US $300,000) worth of assets in any given tax year, she’ll be expected to file a Form 8938 document revealing the detail of these assets, which may include foreign trusts and details of the royal family’s estate that was previously undisclosed. Since Markle made $63,000 for each episode of Suits and has an estimated net worth of around $6.3 million, the Form 8938 is a pretty likely scenario.
Upon the death of his mother Princess Diana, Harry received £21.5 million (AUD $36.2 million) estate and shares a £3.5 million (AUD $6.4 million) annual allowance with the Duke and Duchess of Cambridge.
“Prince Harry receives no public funding,” Koenig said. “But it is possible there may be other family trusts that he receives money from — we don’t know officially if the Queen has set up trusts for her grandchildren — it is possible. It’s the same thing with some of the Queen Mother’s money, there were rumours that there were different trusts set up, but that’s not public information.”
“With that sort of money, if Meghan’s name is on that account, most likely she would be dinged — that would have to be reported as income in the United States,” she continued. “You can be sure that those at Buckingham Palace and those who run the accounts are looking very carefully at all of this to make sure that the royal family’s money does not get reported to the IRS!”
Royal expert David McClure explained that the finances of the royal family have long been “impenetrable” to outsiders.
“I’ve been truffling in the royal coffers for seven or eight years,” adding that no one really knows how wealthy the royals are,” he said. “I suspect the queen doesn’t know.”
“It’s not outside the realm of possibility that a form filed by the wife of a royal would draw increased scrutiny,” warned tax lawyer Dianne Mehany.
This will certainly burst Markle’s fairy tale bubble!
What do you think about this? Let us know your thoughts in the comments section.