Quatloos!

Per the Washington Post:

For Prince Harry, the issue isn't that he will suddenly end up paying U.S. income tax, but rather that Markle's American citizenship could open up the secretive finances of the royal family to outside scrutiny. If she remains a U.S. citizen, Markle will have to file her taxes to the IRS every year. And if she has more than $300,000 in assets at any point during the tax year — a likely scenario, given her successful acting career and her future husband — she will be expected to annually file a document called Form 8938 that will reveal the detail of these assets, which could include foreign trusts.

https://www.washingtonpost.com/news/wor ... 2a5879864b

You can bet that the IRS would be very protective of the secrecy of this return if it ever came to be filed. Unauthorized disclosure would almost certainly get you fired and quite possibly subject you to criminal prosecution. She also could choose to file separately, which might keep a lot of her husband's assets off the return.

Latest rumor is she will renounce her US citizenship and become a British subject. There will be an initial heavy US tax hit for that, but it will keep her taxes out of the hands and eyes of this country.

LaVidaRoja wrote:Latest rumor is she will renounce her US citizenship and become a British subject. There will be an initial heavy US tax hit for that, but it will keep her taxes out of the hands and eyes of this country.

We're getting a fair amount of that in Canada. We have a lot of joint US-Canada citizens and the IRS is getting very aggressive about going after them for tax even if they don't live in the US and, in many cases, haven't lived there for decades. I have a neighbour in his fifties who was born in Texas but had his first birthday here and has lived here ever since. He and his wife own a house in Vancouver which is probably worth $2,000,000 (not a lot here for a house) and they'll have a huge capital gain when they sell it. Not taxable in Canada but, since home sales are taxable in the states, the US will want its cut.

What's got them motivated to renounce citizenship is new information-sharing agreements between Canada and the US. I haven't been following the issue but apparently the American government now has access to enough information to really start causing financial damage to people. As far as I'm aware they don't get a tax credit in Canada for American taxes because they are Canadian residents earning money in Canada.

I can't say I'm sympathetic. This issue has been around forever and if they are so invested in holding their precious US citizenship even though they are Canadian citizens they know the consequences.

This afternoon, I heard that Meghan will keep her US citizenship, and will eventually acquire British citizenship, thus becoming a dual national.

Burnaby49 wrote: What's got them motivated to renounce citizenship is new information-sharing agreements between Canada and the US. I haven't been following the issue but apparently the American government now has access to enough information to really start causing financial damage to people. As far as I'm aware they don't get a tax credit in Canada for American taxes because they are Canadian residents earning money in Canada.

My understanding as to how US citizens who are Candian residents should file as follows:

(A) Prepare a 1040NR to report what US taxes and withholding they would owe if they were not US citizens.
(B) Prepare and file a Canadian T-1. Return (A) can be used to calculate a foreign tax credit on this return.
(C) Prepare and file a US 1040. Return (B) can be used to calculate a foreign tax credit on this return.

I've also been told there is no step (A).

In theory, the foreign tax credits are on an item-by-item basis, so if the home sale is exempt for Canadian taxes but included (less the US$ 500,000 exclusion) for US capital gain taxes, no credit can be taken against those taxes on the US return.

You could be a little sympathetic for those who do not know they are US citizens....

I remember when FATCA came in. We had issues with several Canadian investors who put a US SSN in their Docs. When we asked for a W9, after they stated the had no revocation docs, they were not happy. I got one back with "I moved to Canada in 52 and have never been back, I am not US despite this form" inked access the top.

Unfortunately the US doesn't see it that way, and they were reported as US under FATCA.