Meghan Markle will tell US tax authorities cash secrets

Meghan Markle is facing one last date with another man before her wedding to Prince Harry – an appointment with the US taxman. 

The actress, 36, will have to declare any money she and Harry, 33, have made together since they started living together. 

And her tax return, which must be submitted to US authorities by April 17, will give the Internal Revenue Service an unprecedented look at the British monarchy’s finances.

Tax laws mean that even if Los Angeles-born Meghan lives full-time in the UK, she will still have to file a US return every year. 

‘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,’ US tax specialist Alistair Bambridge, of Bambridge Accountants, told DailyMail.com. 

Tell your secrets: Meghan Markle must tell the Internal Revenue Service if Prince Harry or his family are paying her an allowance and the value of any free accommodation she received

Sparkler: Meghan Markle's engagement ring is estimated to be worth more than $100,000 - so has to be declared to the IRS in her latest tax return as a gift from a foreign citizen

Sparkler: Meghan Markle’s engagement ring is estimated to be worth more than $100,000 – so has to be declared to the IRS in her latest tax return as a gift from a foreign citizen

With less than three months to go until the royal wedding, Suits star Meghan is thought to be dedicating much of her time to planning her nuptials.

She has to pick which designer will make the royal wedding dress and select her bridesmaids, not to mention the tricky diplomatic challenge of deciding where to seat the heads of state – and celebrities such as Sir Elton John ad the Spice Girls – who will be attending the ceremony in Windsor Castle’s St George’s Chapel.

Meghan is reportedly living in the UK on a family visa and will become a duchess after the wedding. 

But she will have a complicated tax status as long as she remains a US citizen. 

The IRS will have to be informed if she receives more than $100,000 (£71,600) from her fiancé or his family. 

Meghan also has to give the US taxman full details of her finances if she and her husband-to-be have joint assets, bank accounts or offshore trusts in excess of $200,000 (£143,100). 

Perks she receives by joining the Royal Family such as the use of Nottingham Cottage, the grace and favor property in the grounds of Kensington Palace where she will live with Harry, need to be valued and declared, unless she is paying rent herself.

And future TV income, such as repeat fees, will all be taxed by the US as long as she is a citizen. 

Bambridge, who has offices in New York, London and Vancouver, explained: ‘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.

Must be declared: Meghan Markle is living with Prince Harry in Nottingham Cottage, part of Kensington Palace. Unless she is paying rent herself, she will have to calculate the value of the benefit she receives from living there

Must be declared: Meghan Markle is living with Prince Harry in Nottingham Cottage, part of Kensington Palace. Unless she is paying rent herself, she will have to calculate the value of the benefit she receives from living there

Secrets to be disclosed: Meghan Markle's role as Rachel Zane in Suits is over but her income from it must be declared. So too must the value of her engagement ring if she has received gifts totaling $100,000 or more in value from 'foreign citizens'

Secrets to be disclosed: Meghan Markle's role as Rachel Zane in Suits is over but her income from it must be declared. So too must the value of her engagement ring if she has received gifts totaling $100,000 or more in value from 'foreign citizens'

Secrets to be disclosed: Meghan Markle’s role as Rachel Zane in Suits is over but her income from it must be declared. So too must the value of her engagement ring if she has received gifts totaling $100,000 or more in value from ‘foreign citizens’

‘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.’ 

Also complicated is Markle’s engagement ring and, in the next tax year’s declaration, her wedding dress.

The diamond engagement ring Prince Harry gave Meghan has been valued at over $100,000 (£71,600) by royal watchers. 

Because it is classified as a gift ‘from a foreign person’, Meghan would have to declare it to the IRS on a Form 3520 or suffer a $10,000 (£7,160) penalty. 

The IRS does not tax its value but all U.S. citizens are told to declare foreign gifts valued above $100,000 or multiple gifts totaling more than $100,000. It allows the tax authorities to see if people are trying to conceal income as gifts to avoid tax.

Lifting the veil: US tax specialist Alistair Bambridge, of Bambridge Accountants, tells DailyMail.com Meghan Markle has not choice but to tell her royal cash secrets to the IRS

Lifting the veil: US tax specialist Alistair Bambridge, of Bambridge Accountants, tells DailyMail.com Meghan Markle has not choice but to tell her 

The same would apply to her wedding ring and bridal dress if they are foreign gifts valued above $100,000 (£71,600) – meaning she will have to know exactly how much each cost.

One high-profile figure who fell afoul of the IRS was British Foreign Secretary Boris Johnson, who was born in New York, thereby gaining birthright citizenship.

Johnson was hit with a US capital gains tax bill of about $140,000 (£100,000) after making a $1m (£700,000) profit on the sale of his home in Islington, North London in 2009 – even though he hadn’t lived in America since the age of five.

He later renounced his US citizenship, dismissing the tax demand as ‘absolutely outrageous’. 

If Meghan does give up her US citizenship, she will have to pay a $2,350 administration fee and could be liable for a separate exit tax on the total value of her property and investments in the US and UK if worth more than $2m. 

Based on previous history it is likely Meghan will comply with all tax laws in all jurisdictions, as she has done for the past seven years while living in Canada as an employee of an American company.

The seventh season of Suits, Meghan’s final, will be aired on US TV from the end of March.

ANYTHING TO DECLARE? WHAT MEGHAN MARKLE OWNS AND EARNS, AND HOW THE IRS COULD TAKE AN INTEREST IN IT

Earnings

Meghan will have to declare any fees she receives from playing Rachel Zane in Suits. She was estimated to earn $50,000 (£36,000) per episode. 

Her final season starts next month but Meghan will receive repeat fees – ‘residuals’ – every time it is rebroadcast. The show is now extensively broadcast around the world.

Her annual salary was estimated to have totaled $450,000 (£324,000) before she met the prince, which included money from acting and sponsorships. 

Markle now has no sponsorship deals and it is unlikely that she still has income from previous contracts. 

Royal allowance

Meghan will have to tell the US taxman if she receives anything more than $100,000 (£71,600) from her fiancé or his family in the form of a royal allowance to cover expenses. 

Since the age of 21, Prince Harry and Prince William have been receiving an estimated $450,000 (£324,000) a year investment profit from their late mother’s $29.9m (£21.5m) estate, on which they pay UK taxes. 

The two princes and William’s wife, the Duchess of Cambridge, also receive an annual $4.88m (£3.5m) allowance from their father, Prince Charles, which is used to cover expenses like travel and wardrobe. 

Property

Nottingham Cottage – the grace and favor property in the grounds of London’s Kensington Palace where Meghan lives with Harry – may be taxed by the US if Markle’s presence in it is seen as a substitute for income before her marriage. 

Her tax preparer may advise her to declare it to avoid any ambiguity.

While she was filming Suits, Meghan rented a three-bedroom, two-bathroom home in Toronto’s Seaton Village, thought to cost around $1,770 (£1,000) a month.

Joint assets

Meghan also has to give the US taxman full details of her finances if she and her husband-to-be have joint assets, bank accounts or offshore trusts in excess of $200,000 (£143,100).

Once married, Meghan would also have to make that declaration. In the U.S. couples file jointly and all assets are considered joint. However, because Meghan will be married to a non-resident, non-citizen, that will not apply to him.

There is one future – extremely unlikely scenario: if Harry becomes King with Meghan as Queen, the US taxman would take an interest in the British royal family’s fortune estimated at $500 million (£360 million) and made up of property, art and investments. However, e is fifth and about to become sixth in line to the throne, so such a detailed return is unlikely to ever happen.

Gifts

It’s not just the US taxman that wants to take his cut from Meghan. 

The actress will have to declare any luxury gifts she bought in the US for Prince Harry, the Queen and his family to the UK taxman – or face a hefty fine. 

Gifts over $188 (£135) imported into the UK from outside the European Union are liable for customs duty and VAT. 

Customs duty is charged at a rate of 2.5% on gifts between $188 (£135) and $877 (£630). 

Above that threshold, the rate depends on the type of goods and where they came from. 

VAT of 20% is also charged on the total value of the goods. The maximum penalty for not paying customs duty is $3482 (£2,500). 

But a person caught for the first time is likely to receive a minimum penalty of $348 (£250), depending on how serious the contravention is. 



Read more at DailyMail.co.uk