THE ROYAL Family is caught up in a “tax nightmare” as US officials investigate whether Meghan and Harry owe them a slice of their fortune.

Meghan, 37, is still an American citizen and pays tax in the US but strict rules mean Harry’s income could also be liable.

This means Meghan’s £3.9million wealth and Prince Harry’s £300,000-a-year trust fund could be looked into by the Inland Revenue Service.

US tax inspectors could even scrutinise the private wealth of Prince Charles and the Queen because they provide support and funding for the couple.

Meghan has to pay tax in her home country on all income “available” to her so this could include to princess jewellery, travel expenses and royal accommodation.

The Royal Family is so concerned about the issue they have even asked a US financial consultancy firm for advice.

Aides fear that the family could be hit with a huge tax bill, with one describing it as their “worst nightmare”.

An aide said: “We're looking at a level of financial exposure the Royal Family has never had to face before. It's the royal household's worst nightmare.”

Currently guidelines given to US citizens living abroad tells them they are taxed on the income which is available to them.

The IRS guidance states: “You are generally taxed on income available to you, regardless of whether it is in your possession."

Prince Harry’s main source of income is from his £20million trust fund he inherited from the Queen Mother and Princess Diana. He receives around £300,000 a year.

He already pays UK income tax but he could end up paying tax in the US because the funds could be judged to be “available” to Meghan.

A former aide told the Sunday Express: "Everything has to be declared. That means a level of fiscal openness and scrutiny the Royal Family are not used to.

"There is a very comfortable relationship between the Palace and the HMRC where the Royal Family volunteers to pay some tax and the taxman is very grateful."

Kensington Palace declined to comment when approached by The Sun Online.