Tax headaches for Meghan/child

https://www.wsj.com/articles/meghan-markles-about-to-have-a-little-bundle-of-tax-headaches-11552642213

No under international law the child will only be British as her room will be considered under UK soveirnty even if she gives birth in the USA

As the article indicates, the child will be a US citizen at birth (under INA Section 301(g), see https://www.uscis.gov/policymanual/Print/PolicyManual-Volume12-PartH.html) even though he or she will presumably be born in the UK.

Without reading the article (since there’s a paywall and the OP did not provide a summary), the answer might fall under “It depends.”

As a comparison, Princess Leonore of Sweden, granddaughter of King Carl XVI Gustaf, was born in NYC. Her father, Chris O’Neill, holds British and American passports. According to the palace, the princess is a dual Swedish-American citizen.

Just read up on it… prince of Monaco gave up his American passport and nationality at 18… so I’m mistaken they do get the nationality but they give it up at 18… Queen Noor of Jordan gave it up after marriage and most likely in a few years after Meghan gets the British passport she will also give up her American nationality

The article states that the child will automatically be a citizen and can’t renounce it until age 16 or 17.

Moreover Meghan is going to have to report any gifts on her own tax return including “the loan of the tiara from Queen Elizabeth II for your wedding” amongst many other things.

Yes the US tax system is completely nuts…

I can’t access the article. I thought tax on a gift was solely an obligation on the donor, which is zero if the donor is a foreigner?

Even within the US, is there any American who writes “weekend use of Uncle’s Ferrari” on their tax return?

Right…since when do you list borrowed items on your tax returns? And where would they be listed?

They aren’t gifts if borrowed…because you give them back.

Yes she won’t have to pay tax, but will have to file Form 3520 to report them, including (it appears) any money from her husband https://www.irs.gov/businesses/gifts-from-foreign-person

If the child is born in the US and the parent is not under a diplomatic permission to be in the US, the child is a citizen.

If the child born outside the US and the mother is a US citizen, the child can apply for US citizenship and it is a very easy process. if it is the father who is a citizen, it is a little harder to get it if they aren’t married (may have to prove he is the bio father) but still can be done.

Meghan hasn’t renounced her US citizenship yet.

Borrowing a tiara is certainly not income to Meghan. Wedding gifts are not income in most cases.

If she has any sense she will keep her US citizenship and make sure the offspring has it too.

This can’t possibly be correct. What if an undocumented immigrant hotel maid of Mexican origin sneaks into her room and gives birth? Is the child now British, not American, by birth?

The U.S. does not require a dual citizen to give up US citizenship at 18, nor does England. My son was born in England (US dad British Mom). He is 32 and still holds dual citizenship.

Correct, but I believe the point was that a child cannot renounce until s/he reaches a certain age, not that s/he must renounce it/choose one. While there are countries that do not allow dual citizenship, both the US and the UK allow it.

And I’m quite sure that if there ARE taxes owed…this family will have the resources to pay them?

“Summon the royal accountant!” ?
Somehow I doubt that Meghan will have anything to worry about.

And, US tax laws require a certain minimum threshold per year before a gift is taxed. A one-time 2k gift to a daughter for example, would not require the recipient to pay a tax.

Foreign gifts may need to be reported on an informational return. If any tax is owed on gifts between US citizens, the donor pays, not the recipient.

I read the article and wondered where the author got some of her conclusions on Meghan’s gifts.

Probably the same reliable sources who quoted the cost of the shower. :slight_smile:

“And, US tax laws require a certain minimum threshold per year before a gift is taxed. A one-time 2k gift to a daughter for example, would not require the recipient to pay a tax.”

Incorrect. The gift recipient does not pay any tax; the gift giver must report any amount over $15k given to any given individual in any given year. It then comes out of the giver’s estate tax exemption which is now $11M and a change. But no tax is due immediately.