Why Americans Abroad are Giving Up U.S. Citizenship

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If the state of our government today isn't making you want to renounce your U.S. citizenship, another law might.

It's called the Foreign Account Tax Compliance Act, otherwise known as FACTA. The law was passed in 2010 and takes effect in July 2014. It requires all financial institutions around the world to report to the IRS the earnings and assets of American citizens abroad.

In essence, the law is designed to crack down on tax evasion and offshore tax havens. But it doesn't feel that way for many of the 6 million Americans living abroad.

Under FACTA, Americans abroad must provide detailed information on their overseas financial accounts and any income associated with that. Failure to do so could mean a minimum fine of $10,000. The process is long, complicated and expensive.

The result: More Americans abroad are relinquishing their U.S. citizenship.

Ruth Freeborn is one of those people. She has long lived in Canada with her Canadian husband, and recently decided to relinquished her American citizenship. Today she holds a Canadian passport.

Jackie Bugnion knows many stories like Ruth's. She's the head of the tax team for American Citizens Abroad in Geneva, a nonprofit advocacy group for American expats. She says FACTA has made life increasingly difficult for U.S. citizens living overseas.