Relinquishing your U.S. citizenship can come with a hefty price tag. Because the United States is one of the only countries to tax based on U.S. citizenship, even Americans living abroad must pay U.S. taxes. That can make it tempting for expatriates to renounce their citizenship and skirt U.S. tax rules. Doing so comes at a price. A record number of Americans are giving up their citizenship, according to the U.S. Treasury Department. Last year, 5,411 individuals either gave up their citizenship or terminated long-term residency. That's a 26 percent increase from 2015. The list of individuals who have given up their citizenship includes high-profile names like Facebook co-founder Eduardo Saverin and musician Tina Turner. The list may gain one more boldface name with Meghan Markle, the American actress who is engaged to Britain's Prince Harry. The announcement of the couple's engagement this week included news that Markle plans to become a British citizen.

The administrative process involved in giving up your citizenship is simple, said Joshua Ashman, a co-founder and partner at Expat Tax Professionals, which provides professional tax services to U.S. expatriates. But the tax considerations to wade through are more complicated, he said. You must make an appointment at a U.S. embassy, sign the appropriate forms and take the Oath of Renunciation. You also must pay a $2,350 administrative processing fee. Once your application is approved, which can take several months, you are given a Certificate of Loss of Nationality. You must also notify the Internal Revenue Service through Form 8854 that you have expatriated, which can trigger a potentially bigger liability: The exit tax. The exit tax is aimed at individuals who are renouncing their citizenship for tax-related purposes, Ashman said. You may or may not be subject to the tax based on your average annual net income tax for the past five years, whether you complied with your federal tax obligations during that time or whether your net worth is $2 million or more. Your net worth is calculated including everything from investment accounts to real estate to other assets like art work and other personal property, including assets held overseas, Ashman said.