Record number of Americans dump U.S. passports

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More Americans than ever before are turning their backs on the United States.

The number of citizens and long-term residents cutting their official ties to Uncle Sam jumped more than 20% last year to 4,279, according to a CNNMoney analysis of the latest government data.

It's a trend that's been increasing in recent years. Many of those severing links are Americans living overseas who are tired of dealing with complicated tax paperwork, a headache that has worsened since new regulations came into effect.

Eighteen times as many Americans renounced their citizenship or long-term residency in 2015 compared with 2008. Last year was the third record-breaking year in a row.

Unlike most other countries, the U.S. taxes its citizens on all income, no matter where it's earned or where they live. For Americans living abroad, that results in a mountain of paperwork so complex that they are often forced to seek professional help, forking out high fees for accountants and lawyers.

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The burden has gotten heavier in recent years with the Foreign Account Tax Compliance Act, which became law in 2010.

It requires individuals to report certain foreign assets and banks to disclose all foreign accounts held by Americans. That comes on top of another rule that requires Americans to disclose foreign bank holdings above $10,000.

The regulations are part of a U.S. government campaign to fight tax evasion, given added impetus after major Swiss banks admitted to helping Americans hide assets offshore.

But those efforts are making life difficult for the 7.6 million Americans living abroad.

Related: How you'll benefit from the new tax deal

As financial institutions grapple with FATCA, some overseas banks -- both big and small -- have ditched their U.S. clients, leaving some without even basic checking and savings accounts. That's because banks that mistakenly fail to report any accounts held by Americans outside the U.S. can face steep penalties.

Some wealthy Americans who are renouncing their citizenship may end up paying lower taxes in the future. But it's illegal to give up U.S. status to dodge paying a tax bill -- and doing so doesn't mean authorities won't come looking for back taxes.

-- Sophia Yan contributed to this report.

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