taxes

There is no tax agreement between Brazil and the US so you are expected to pay taxes in both locations and there are very few reductions or credits you receive by paying Brazilian taxes. However, if you reside abroad and make less than a certain income (I don't have the number on hand), you are not required to pay US taxes.   It is worth checking that out as you may be able to get away only paying Brazil taxes depending on how much you make.

Hello ndfansince53,

Yes, you will still need to file your annual 1040 with the IRS no matter where you live in the world. You will also have to report on you 1040 any foreign earned income as part of your "world income".

The USA and Brazil do not have a Tax Treaty so you have no protection against double taxation, other than that which the IRS provides in the way of exemptions.

Likewise you must file an annual DIRPF (personal income tax declaration) if you have taxable income (Brazilian) over R$26,816.55 or non-taxable income in excess of R$40,000 during the year. You also would need to file if you own property, to declare it's purchase value for any future taxes on capital gains that you would be subject to.

On your DIRPF you are also required to report any foreign sourced income, and may or may not be taxed on it here. Generally speaking you wouldn't be, but it may have the net result of bumping you up a notch or two in tax brackets and effectively cause you to pay a bit higher rate on taxable earnings here.

Most expats working in Brazil use an international tax expert to file both their foreign and Brazilian returns since there are many complicated factors to consider.

Cheers,
James   Expat-blog Experts Team

Good to know! Thank you, James! 

James:

Thanks for your input.

All of our income when my wife retires will be from US pensions, Social Security and IRA distributions.

We would be paying about 15% of our gross to the IRS taking into account all the deductions we would be allowed.

The only Brazilian taxable income we will have is a small pension my wife receives, currently about R$9,000 annually.

Our US retirement income would put us in the top tax bracket in Brazil or an average of about 25% on our gross US income with no seeming deductions allowed.

That would seem to amount to 40% of our gross income.

Am I reading it correctly? If that's the case, why do people retire in Brazil?

ndfansince53

You may not necessarily be taxed on the US pension income in Brazil, but you do have to report it.

Cheers,
James