IRS Across the Pond
You probably don’t invest a great deal of time feeling sorry for a certain U.S. citizen named Meghan Markle, who has just tied the proverbial knot with Prince Harry of England. However, an article in the Wall Street Journal, states that the bride-to-be, as well as other American citizens who marry foreigners, are subject to a lifetime of harassment by America’s Internal Revenue Service.
As an example, what happens if the Queen of England lends her a tiara or diamond bracelet? She’d need to tell the IRS about it. If (as is probable) Harry and Meghan share a charge card and it is also tied to a bank account that has more than $10,000 (which is also likely), this card and account need to be reported to U.S. authorities.
It is possible that none of these things will raise the newlywed’s tax bill. But, there are serious penalties for not giving the correct reports to the U.S. government — possibly as much as half of the total assets within an account. Assets that are held in trust can be taxed at rates up to 37 percent — and many English royal assets happen to be held in trust.
The report goes into some other strange provisions from the tangle of global financial requirements. In situations where a U.S. citizen works in Australia,
Australian law requires that person to have a retirement account. But, U.S. tax law treats the accounts the same as overseas trusts, using complex reporting rules.
Obviously, Meghan could opt out of U.S. citizenship, which thousands of others have done. But, she wouldn’t receive U.K. citizenship until after a potentially significant waiting period. She would still have to cope with U.S. tax law in the meantime.