Life Could Get Much More Expensive for Prince Harry and Meghan Markle in America, Tax Expert Says

It’s going to be hard enough for Prince Harry to reinvent himself as just “Harry” in his new, royalty-free life with his wife Meghan, Duchess of Sussex. But the major detail that’s intriguing everyone right now is how this couple plans to fund their expensive lifestyle — and if it’s going to get even pricier without the British royal family’s support.

For example, Canada just announced they would not foot the bill for Harry and Meghan’s security. The couple also won’t be receiving money from the Sovereign Grant, which allocates taxpayer funds for working royals. Plus, if the Duke and Duchess of Sussex do move to North America, they’ll have to navigate a whole new world of tax laws.

Life could get complicated — and more expensive — for the rogue royals quickly.

Prince Harry and Meghan Markle
Prince Harry and Meghan Markle | Toby Melville – WPA Pool/Getty Images

Prince Harry and Meghan Markle will have to file taxes no matter where they land

Royal fans might be surprised to learn that Meghan didn’t have to give up her United States citizenship to become a royal. When she married into the royal family, Meghan also applied for U.K. citizenship, but that process could take years. For now she is still a U.S. citizen.

But the most fascinating fact of all is that even though Meghan is living abroad, she’s still required to file tax returns in the United States regardless of where she’s living. And if her income increases due to speaking engagements or whatever businesses she joins, she’ll have to pay taxes on all of it.

“It gets really tricky… a lot of times when people make these life changes, they do it thinking they’re going to create some simplicity… allowing them to step back and maybe simplify their life,” Nathan Rigney, lead tax research analyst with H&R Block’s Tax Institute told Showbiz Cheat Sheet. “But from a tax perspective, it’s going to get complicated.”

Prince Harry and Meghan Markle
Prince Harry and Meghan Markle | Max Mumby/Indigo/Getty Images

Buying a home in California could come with a huge tax burden

There’s a rumor going around that Harry and Meghan were scoping out a posh Malibu mansion. It makes logical sense that this pair would want to purchase a home in California — it’s where Meghan grew up and where her mom, Doria Ragland, currently lives. Plus, the security teams there are very used to celebrities seeking privacy just like the Sussexes.

But there are tax details this couple needs to keep in mind before deciding on California as their home. Notably, if either spouse is considered a California resident, they will have to report any income from out of state. California has the highest state income tax rate at 13.3%.

What about Archie?

Archie Harrison
Archie Mountbatten-Windsor | Toby Melville – Pool/Getty Images

The Duke and Duchess of Sussex chose to move because they were being harassed by overly aggressive, allegedly unfair members of the press. But another huge motivation for them is their young son, Master Archie. They want to give Archie a normal upbringing far from the damaging glare of the cameras.

From a financial standpoint, Archie can still receive gifts from his foreign family. So if his grandfather Prince Charles would bequeath him with stocks or properties, he’d be eligible to receive those legally. But unlike in the past, Harry and Meghan could not secretly use those “gifts” to dodge paying taxes, which was a common tactic employed by wealthy people before the laws changed.

“The rule is that if your kids have unearned income — like from this trust — it’ll be taxed at the parents’ tax rate. It doesn’t help them in that sense,” Rigney explained.

Where Harry and Meghan are getting their money from matters

Rigney explained that income tax laws are tricky and vary based on subtle details, like origination of the funds.

“Something interesting in the U.S. law — you’re receiving money from these trusts, and [Harry and Meghan] are no longer receiving a stipend from the royal trust necessarily. But we’ve seen reports that they’re going to receive some distribution from Charles,” he said. “The tax for that is not that straightforward either. Depending on how the trust is set up, it’s either a taxable distribution or it’s a gift, and then the gift tax applies.”

He continued: “For every little source of income, there are 20 questions.”

When asked if the Sussex family would be better off living in Canada or the United States, at least from a financial standpoint, Rigney said it was basically a crapshoot. You’d have to work the numbers, but there are benefits and negatives to both options. It just depends on how all those little details play out.

Prince Harry and Meghan Markle
Prince Harry and Meghan Markle | DANIEL LEAL-OLIVAS – WPA Pool/Getty Images

The Sussexes will hire people to figure out their tax situation

Even though they’re technically unemployed now, Harry and Meghan still have plenty of money to spend. Besides just maintaining their lifestyle, they’re also going to have to pay top dollar for tax experts to make sure they’re in compliance — or they’ll be facing huge penalties.

Their tax professionals are clearly worth every penny spent!