She Did It! Last month, on May 19, 29 million Americans woke up to take a break from school shootings, Russian collusion, and partisan gridlock to watch a California woman achieve a rare fantasy. The woman in question watched the sun rise as plain old Meghan Markle. But by the time it had set, she had become Her Royal Highness Meghan, Duchess of Sussex. Lots of Americans grow up wanting to become a princess. Some of them spend years acting like it’s already true. But, throwing aside concepts like social mobility and “intergenerational earnings elasticity,” once an American girl picks her parents, it’s pretty much game over. Now Meghan’s parents can debate whether they lost a daughter or gained a son. And the royal wedding fans at the IRS can debate whether they lost a taxpayer — or gained a whole new source of revenue! Markle will become a British citizen, which won’t put anything in the IRS’ pockets. The real issue is whether she keeps her U.S. citizenship, too. If so, she’ll be subject to U.S. tax on her worldwide income, including anything she reports with Prince Harry. And if she keeps more than $300,000 in assets abroad, she’ll have to file Form 8938 reporting them. That may not sit well with the Queen, who recently saw some Cayman Islands holdings owned by her Duchy of Lancaster estate revealed in the 2017 “Paradise papers” leak. Last year’s Tax Cuts and Jobs Act could make things even harder for the new princess. The new law caps deductions for state and local income and property taxes at $10,000 per year. That could make keeping a pied-a-terre back home a bit pricier. Fortunately, she can still take a foreign tax credit for taxes paid outside of the U.S. Father’s Day Chili LimeChickenWings
If Her Royal Highness chooses instead to give up her U.S. citizenship, she’ll have to fill out some paperwork, take an Oath of Renunciation, and pay a $2,350 expatriation fee. It’s easy enough that 6,800 people did it in 2017, mostly to quit paying U.S. taxes. The IRS helpfully publishes a list ratting them out by name every quarter. But there’s a catch, and it’s a big one. If the princess’s net worth is over $2 million (which it probably is), or her annual tax for the five years before she leaves was more than $162,000 (which it probably was), she’ll owe tax on any appreciated assets she owns, calculated as if she had sold them on the day she leaves. There’s a $680,000 exemption … but the whole thing still sounds like a royal headache! Prince Harry may be off the market, but if you’re still hoping to marry royalty, don’t give up hope! Vanity Fair magazine just introduced the 12 most eligible royals in a post-Harry world. Just remember to call us before you walk down the aisle. And remember, we’re here for the rest of your court, too!
-Borbala Banto, CPA
INGREDIENTS •
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1 lime, halved
4 pounds chicken wings 1 stick unsalted butter, softened 1 1/4 tablespoons Thai red curry paste
Extra-virgin olive oil Kosher salt and freshly ground black pepper Chopped cilantro for garnish
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1/4 cup honey
1/4 cup soy sauce
INSTRUCTIONS 1. Heat oven to 425 F. 2. Rinse wings under cold water and pat dry. Season liberally with salt and pepper, and drizzle with olive oil. Roast on a baking sheet for 25 minutes or until skin becomes crisp and brown. 3. Blend butter, red curry paste, honey, and soy sauce in a large mixing bowl. 4. Toss wings in butter mixture. Squeeze lime juice on top, transfer to serving plate, and garnish with cilantro.
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