March 9, 2011 at 9:27 am #273924
Could use some tax advice from any Americans living in Brazil. I have my permanent residency visa + RNE + CPF. I’ve been here about a year working from home for a US company making US dollars. I’ve had US taxes taken out with my US address on all my forms. I’ve exceeded the number of days that I can return to the US (35), so it looks like I’m definitely paying federal income tax there.
Any idea if or how much Brazilian tax I’ll need to pay? Who can I go to locally in Sao Paulo that can shed light on all of this? I appreciate any experience sharing.
March 9, 2011 at 10:49 am #273928
If you have an e-CPF you can do it online.Go to eCAC and fill out your tax return.In your case I recommend to use a “contador”.He will do your tax return for R$300-400.Or you can just skip it all together as the Brazilian govt will never find out that you work from home gaining USD.As to how much you are going to pay depends on how high your income is.You can do a simulation here:Choose monthly or yearly income on the tab.Electronic CPF you can get here: https://serasa.certificadodigital.com.br/produtos/e-cpf/Fill out your tax return here: https://cav.receita.fazenda.gov.br/eCAC/publico/login.aspx
March 9, 2011 at 11:41 am #273935
Thanks. In general, will paying US taxes lower the amount that I have to pay in Brazil or are they two different universes?
March 22, 2011 at 10:12 am #274409
March 23, 2011 at 9:33 am #274424
I looked into this, due to US-sourced income. As I would not otherwise be subject to American taxes, a withholding tax on this income is retained at source. In Brazil, when filing with the Receita Federal, this tax (already paid to the IRS) can be offset against the Brazilian taxes that I’d have to pay on global income.
In the above situation, someone living in Brazil ends up paying income tax to the United States rather than to Brazil. The higher rate of the US tax offsets the tax due in Brazil entirely. Which effectively means being tax free in Brazil.
But before you pop open the champagne, all this does is that it prevents double taxation on the same income.
It doesn’t lower taxes, per se. In fact, since the US withholding tax is 30% and the max income tax bracket in Brazil is 27.5%, it actually increases the total tax paid by two and a half points.
It is also a windfall for the US: Getting income without having to provide any services (other than a tax collection service) in return. Brazil, as the country of residence, unfairly gets nothing. A double taxation treaty could fix that but it has been in the works for years and still doesn’t exist. Under current circumstances it is hardly in the interest of the States to sign one with Brazil.
March 24, 2011 at 3:29 pm #274457
Thanks for this info, picolino. Would it be best to talk to an accountant about this or a tax accountant?Thanks again.
March 24, 2011 at 5:45 pm #274461
Run it by a Brazilian tax acountant if you have to, but there is really nothing to it: It is a simple matter of calculating tax due in Brazil and then deducting tax already paid in the US.
Just remember that only federal US tax can be offset (not state or local), and that you want to retain any kind of paper or printouts as proof that US tax was paid.
Also keep in mind that you can only offset taxes within the same year. You don’t get to carry a tax credit over, so stay on top of the dates and make sure your US taxes are paid either as early as possible or as late as possible so they “fit” and match the tax year in question. Otherwise you risk leaving free money on the table for the hyenas at the IRS or the Receita Federal, and that is just dumb.
When in doubt, just keep asking questions here, too.
That is how we help each other, and how we all share and learn.
March 25, 2011 at 4:11 pm #274483
One more question. And not to belabor the point, but the fact that the US and Brazil don’t have a double taxation treaty, wouldn’t that mean I would need to pay both? That the fact that I’ve paid in the US is irrelevant to Brazil?
March 25, 2011 at 11:06 pm #274490
While there is no treaty, Receita Federal in Brazil lets you offset federal US taxes paid to the IRS within the same year. You pay taxes in both places on the same income, but you deduct what you paid in the US from your Brazilian taxes due. So, no: You don’t pay double on the same tax. That would be (even more) unfair.
However, US state and local taxes can not be offset. So you are not 100% “blindado” against potential double taxation. And as mentioned above, also watch out for both taxes being in the same year. The Receita Federal won’t let you offset taxes paid in another year than the one you’re filing for. There is no carry-over.
picolino 2015-04-06 15:52:55
March 27, 2011 at 3:26 pm #274512
Thanks for all this help. Is there an accountant in Sao Paulo you can recommend?
April 4, 2011 at 11:41 am #274645
[QUOTE=picolino] And as mentioned above, also watch out for both taxes being in the same year. The Receita Federal won’t let you offset taxes paid in another year than the one you’re filing for in prison. There is no carry-over.
Picolino knows of which he speaks. You’d be wise to heed his advice.
For this reason, if say you are a US retiree living in Brazil, with no taxes directly withheld, then you it might behoove you to consider prepaying your estimated US taxes before the actual US deadline (the following calendar year) for this very reason. This is not as radical, even US tax-wise, as it might initially sound. Often it pays (just do the math) to pre-pay state taxes due the following year to ensure a larger US federal deduction this year.
Here, you are analogously prepaying your federal taxes to ensure that you are not subject to undue double taxation – and that you do not lose the applicable foreign tax credit in Brazil.
March 10, 2015 at 9:23 am #28306
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