Does Meghan Markle Have to Pay U.S. Taxes This Year?
Introduction
While Meghan Markle may be busy living a fairytale life with her prince, she is not exempt from all the monotonous chores the rest of us commoners have to deal with. Although she is ensconced in a British palace, she still has to file United States taxes like the rest of us, at least as long as she maintains American citizenship.
Image Description: Meghan Markle attending a royal event.
Key U.S. Tax Requirements for Americans Abroad
Is the Move Temporary or Permanent?
The U.S. taxes its citizens and lawful permanent residents (LPR) on their worldwide income. So, if you decide to move or live abroad, the first question to answer is whether the move is temporary or permanent. And if the move is permanent, are you renouncing your U.S. citizenship or residency?
If yes, then these individuals might be subjected to an exit tax. The exit tax is calculated as if the individual sold all assets the day before expatriation. Paying this tax requires completing IRS Form 8854 Initial and Annual Expatriation Statement, listing assets, liabilities, and income. Penalties can apply for failing to file this form.
Image Description: An infographic explaining the exit tax and expatriation process.
Temporary Moves
If the move abroad is not permanent, U.S. citizens are still required to pay taxes on their income – from both U.S. and non-U.S. sources.
No matter where you live, if you are a U.S. citizen or permanent resident, you need to file a U.S. income tax return and pay tax on your worldwide income. Americans living abroad are also subject to the federal gift and estate tax, assuming they meet the thresholds involved.
You may also be required to pay state taxes depending on the laws of your state of residence.
Image Description: A tax form showing different income sources for Americans living abroad.
Avoiding Double Taxation
If you live abroad, it’s a good idea to carefully research and understand any income tax treaties that may exist between the U.S. and the country where you reside.
Each treaty is unique, so an American living in the United Kingdom would face a slightly different situation from, say, an American living in Canada or France. Though they are different, most treaties are designed to eliminate double taxation.
Image Description: A document showing the tax treaty between the U.S. and the UK to prevent double taxation.
Extra Time to File
Those who live abroad receive an automatic two-month extension to file and pay federal income tax returns.
This should be helpful if you live in a place with an unreliable postal service or where gathering the pertinent paperwork is complex. But keep in mind you will be charged interest on any tax not paid by the original due date for your return, which for individuals is typically April 15.
Image Description: A calendar showing the extended deadline for filing taxes for Americans living abroad.
Conclusion
Even as a member of the British royal family, Meghan Markle, like all U.S. citizens, must comply with U.S. tax laws. Understanding the requirements, avoiding double taxation, and taking advantage of the extra time to file can help ensure that all tax obligations are met properly.
Image Description: Meghan Markle smiling, with a tax document in the background.
