u.s. expat tax guide – brazil

Do US citizens living in Brazil need to file US taxes?

If you’re a US citizen or Green Card holder living in Brazil, you still need to file a US tax return if your worldwide income exceeds specific thresholds. This means all income from everywhere, not just from the US or Brazil, must be reported.

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What income level means you need to file US taxes from Brazil?

The income limits that require you to file a tax return depend on your filing status:

Single (under 65 years old): US$13,850 in 2023, US$14,600 in 2024
Married Filing Jointly: US$27,700 in 2023, US$29,200 in 2024
Married Filing Separately: US$5 in both years
Head of Household: US$20,800 in 2023, US$21,650 in 2024

Social Security Credits: If you’re employed by a US company but move to India for a few years, you may no longer be earning US social security credits while on the Indian payroll. This can impact your eligibility for US Social Security benefits.
Self-Employment: If you’re self-employed in India, you’ll need to pay self-employment tax to continue earning social security credits. This can help you accumulate the 40 quarters needed to qualify for social security benefits in the future.

Does the filing threshold include all of your income?

Yes, the income thresholds include all of your income, no matter where it comes from. That means any income from the US, Brazil, or other countries counts.

How do you file if your spouse is not a US citizen?

If your spouse is a Brazilian national or another non-US person, you’ll likely use the “Married Filing Separately” status.

This means that even if you have as little as US$5 in worldwide income, such as bank interest, you must file a US tax return.

How to file if your spouse is also a US citizen or Green Card holder?

If both you and your spouse are US citizens or Green Card holders, you will most likely file jointly under the “Married Filing Jointly” status.

This comes with a higher filing threshold of US$27,700 for 2023 and US$29,200 for 2024.

Ensure Eligibility: A tax advisor can help determine whether you’re eligible to contribute to an IRA based on your income and foreign exclusions.
Optimize Contributions: An advisor can help you decide whether a Traditional IRA or Roth IRA makes more sense based on your current and future tax situation.
Avoid Penalties: Failing to report foreign accounts or incorrectly claiming exclusions can lead to significant penalties. A professional can help you navigate these rules to ensure compliance.

What if you are single?

If you are single and under 65 years old, you need to file a tax return if your gross income is at least US$13,850 in 2023 or US$14,600 in 2024.

Can having dependents change your filing requirements?

If you have dependents or young children, you might be able to file as “Head of Household.” This filing status has different income thresholds and could provide some tax benefits. The filing threshold is US$20,800 in 2023 and US$21,650 in 2024.

What IRS forms do US expats in Brazil need to file?

As an American living in Brazil, you may need to submit various forms to the IRS to report your income, foreign accounts, and financial details:

Form 1040: Standard US individual income tax return.
Form 2555: To claim the Foreign Earned Income Exclusion (FEIE).
Form 1116: To claim the Foreign Tax Credit (FTC).
Form 8938: Statement of Specified Foreign Financial Assets.
FBAR (FinCEN Form 114): To report foreign bank accounts if their total value exceeds US$10,000 at any point during the year.
Form 5471: If you own more than 10% of a foreign corporation.
Form 8865: If you are involved in a foreign partnership.
Form 8858: If you have a foreign disregarded entity or branch.

What to do if you haven’t been filing US taxes?

If you haven’t been filing, you can still catch up without facing major penalties. The IRS has programs like the Streamlined Filing Compliance Procedures that help expats become compliant, even if they haven’t filed in several years.

Should you use FEIE or FTC when living in Brazil?

US expats in Brazil have two main ways to avoid double taxation: the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC). Which one is better depends on your income, the tax rates, and your overall financial situation.

FEIE allows you to exclude up to US$126,500 of foreign-earned income from US taxes in 2024. This only applies to income you earn from working (like wages or salaries) and not passive income like interest or dividends.
FTC lets you reduce your US tax bill by the amount of tax you’ve already paid to Brazil on the same income. This applies to different types of income, not just earnings.

For many expats in Brazil, FEIE is often the preferred choice because:

It makes the tax return simpler.
It has a high exclusion limit, which can bring taxable income to zero for many earners.

What tax deductions are available for US expats in Brazil?

Here are some tax deductions and exclusions that US expats in Brazil can use:

Foreign Earned Income Exclusion (FEIE): Exclude up to US$126,500 of foreign-earned income.
Foreign Tax Credit (FTC): Claim a credit for taxes you’ve paid to the Brazilian government.
Housing Exclusion or Deduction: Deduct certain housing expenses if you qualify for FEIE.
Standard Deduction: US$14,600 for single filers in 2024.
Itemized Deductions: Deduct expenses like mortgage interest, medical costs, and charitable donations if they exceed the standard deduction.
Student Loan Interest Deduction: Deduct up to US$2,500 in student loan interest.
Retirement Account Contributions: Contributions to retirement accounts like IRAs might be deductible.