U.S. taxes for Americans in Brazil: what to file, and how to catch up.
Americans in Brazil still file a U.S. return every year. There is no U.S.-Brazil income tax treaty, but Brazilian tax still counts toward your U.S. foreign tax credit, and a social security agreement keeps workers from paying into both systems. The traps are Brazilian funds and investments that are tax-free in Brazil but not in the U.S. Most people who fell behind can catch up under the Streamlined procedures, with no penalty if they qualify.
Sound familiar?
- You married a Brazilian and settled in Brazil.
- You invest in LCIs or LCAs because they’re tax-free in Brazil.
- Your employer offers a PGBL or VGBL plan.
- Your Brazilian bank asked you to sign a FATCA form.
How does the IRS treat Brazilian investments, pensions and FGTS?
Every one of these goes on your FBAR. What differs is how the IRS taxes them.
| Account | U.S. treatment | |
|---|---|---|
| Brazilian funds | Usually PFICs (Form 8621), with complex reporting and tax rules. | Watch out |
| LCI, LCA and CDB | LCI and LCA interest is tax-free in Brazil but taxable for the U.S. CDB interest is taxable in both. | Taxable |
| PGBL and VGBL plans | Not U.S. retirement plans. Growth may be taxable for the U.S., and VGBL plans can hold PFICs. | Watch out |
| INSS pension | Brazil can tax it, and the U.S. can too, with a credit for the Brazilian tax. There’s no treaty to change that. | Mostly friendly |
| FGTS | Your employer’s deposits could be taxable for the U.S. when made or only when withdrawn, and the rules don’t settle which. | Check first |
| Your U.S. accounts, in Brazil’s eyes | Since 2024, Brazil taxes residents’ income from investments abroad. The U.S. taxes the same income, so it takes care to avoid paying twice. | Plan ahead |
Which Brazilian investments are PFICs?
Brazilian investment funds of every kind, including fixed-income funds, multimercados, FIIs (real estate funds) and Brazilian ETFs, and the funds inside VGBL and PGBL plans. For U.S. tax they’re passive foreign investment companies, or PFICs.
- Each fund needs its own Form 8621 in most years, and gains can be taxed at the top U.S. rate plus an interest charge, unless an election was made in time.
- FIIs are popular because their income is tax-free in Brazil, but for the U.S. they’re PFICs with no Brazilian tax to credit.
- Not PFICs: shares of individual companies on B3, Tesouro Direto government bonds, CDBs, LCIs, LCAs and bank accounts.
Is there a U.S.–Brazil tax treaty?
No income tax treaty, but the two countries do have a social security agreement, in force since 2018. Without a treaty, U.S. law does the work:
- The foreign tax credit doesn’t need a treaty. Brazilian income tax (IRPF) can be credited against U.S. tax on the same income.
- The foreign earned income exclusion works the same with or without a treaty.
- No special rules for PGBL, VGBL or FGTS, which is why their U.S. treatment is unsettled.
- The social security agreement generally means you pay into one system, INSS or U.S. Social Security, not both.
Brazil shares account information with the IRS under a FATCA agreement, so Brazilian banks report accounts held by Americans.
When are Brazilian and U.S. taxes due?
Both tax years run January to December, so each Brazilian year lines up with one U.S. return. Your informe de rendimentos from your employer and bank gives most of what the U.S. return needs.
| Brazil | United States | |
|---|---|---|
| Tax year | January to December | January to December |
| Annual return | The DIRPF, filed from March to the end of May | April 15, moved to June 15 automatically when you live abroad, or October 15 with an extension |
| Paying the tax | Withheld from your salary, with any balance due with the return or in installments | April 15, even if you file later |
| Foreign accounts | Listed on the DIRPF, and reported to the central bank above set limits | The FBAR, due October 15, filed online |
Foreign tax credit or exclusion: which wins in Brazil?
Usually the foreign tax credit for employees. Brazilian income tax reaches 27.5%, which on a mid-career salary is often close to or above the U.S. tax on it.
- Remote workers paying little Brazilian tax usually use the foreign earned income exclusion, up to $130,000 for 2025.
- Investments that are tax-free in Brazil, like LCIs, LCAs and FIIs, have no Brazilian tax to credit, so the U.S. tax on them is paid in full.
- Families with children often keep the credit, because it allows the refundable part of the U.S. child tax credit, up to $1,700 per child for 2025.
We run your returns both ways before choosing. How we compare the exclusion and the credit.
A worked example: a manager in São Paulo
Paul married a Brazilian and moved to São Paulo in 2016. He earns R$240,000 a year, his employer deposits FGTS, he has a VGBL plan, and he keeps savings in LCIs and an FII. He has never filed a U.S. return.
| Item | How it’s handled |
|---|---|
| Salary | Brazilian tax is close to or above the U.S. tax on it, so with the foreign tax credit his U.S. tax on it is little or nothing. |
| LCIs | The interest is tax-free in Brazil but taxable on his U.S. return. |
| FII and VGBL | The FII and the funds in his VGBL are PFICs: a Form 8621 each, in each year filed. |
| FGTS | On the FBAR; whether deposits are taxable now or later is unsettled, so we explain the options. |
| Catching up | Three years of returns and six FBARs under the Streamlined procedures, with no penalty if he qualifies. |
Catching up from Brazil
Most Americans in Brazil who fell behind without meaning to can catch up under the Streamlined Foreign Offshore Procedures: three years of returns, six years of FBARs and, if you qualify, no penalties. If only FBARs are missing, or you’ve moved back to the U.S., another route may fit better. See every IRS catch-up option for expats, compared.
Common questions
Do I pay U.S. Social Security tax in Brazil?
Generally not if you pay into the Brazilian system. The U.S.-Brazil totalization agreement, in force since 2018, prevents paying into both systems for the same work in most cases.
Without a tax treaty, will I be taxed twice?
Usually not. The U.S. foreign tax credit works without a treaty, so Brazilian income tax you pay generally reduces your U.S. tax on the same income.
Should I sell my Brazilian funds?
Maybe, but not before getting advice. Selling has tax consequences in both countries. We’ll show you the U.S. cost of keeping versus selling.
Are LCIs and LCAs tax-free for the U.S.?
No. They’re tax-free in Brazil only. The interest goes on your U.S. return, with no Brazilian tax to credit against it.
Is my INSS pension taxed by the U.S.?
It can be. Brazil can tax it, and the U.S. can too, with a credit for any Brazilian tax on it.
My spouse is Brazilian. How do we file?
Usually as married filing separately, so your spouse’s income stays off the U.S. return. Filing jointly is possible, but rarely better. Married to a non-American.
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