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WSJ Quotes Dianne Mehany on Meghan Markle and Tax Obligations of U.S. Expats Who Have Children Overseas

March 15, 2019, The Wall Street Journal

As a U.S. citizen married to a British royal, Meghan Markle, the Duchess of Sussex faces a thicket of tax complications. So will her child.

. . .

Some experts advise registering the birth as soon as possible with the U.S. consulate or risk horrific record-keeping in the future, such as proving the child’s whereabouts for every year of his or her life.

“Doing this right away will save a world of trouble later on,” says Dianne Mehany, an attorney with Caplin & Drysdale who advises global families.

As a U.S. citizen, your child will be subject to U.S. taxes and likely need to file returns to the Internal Revenue Service. The U.S., unlike most countries, taxes its citizens on their world-wide income even if they’ve always lived abroad.

. . .

Would the IRS really audit a child? Ms. Mehany says the IRS rarely initiates audits for children, but it does pull them into audits of their parents and then imposes punitive penalties.

. . .

Both experts I spoke with urge your reporting to be inclusive. “This family has too high a profile to risk being smeared as tax evaders,” says Ms. Mehany.

She also advises not renouncing your U.S. citizenship when your British passport comes through. Renunciation could be expensive for you because of the exit tax, and U.S. citizenship can be hard to get once you’ve given it up.

For the full article, please visit The Wall Street Journal’s website.

Excerpt taken from the article “Meghan Markle Is About to Have a Little Bundle of Tax Headaches” by Laura Saunders for The Wall Street Journal.

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