I love to share my concerns with you all. I am a dual citizen Brazil/USA and I always saw the USA as a fair country, like they say, Americans always do the right thing after trying everything else. But lately I have been questioning this belief because of the enormous difficulties I am having trying to comply with the IRS demands on Americans Living Abroad.
They seem so unfair to me. My reactions so far can be summed up under FEAR. And perhaps CONFUSION. Love to exchange ideas with you all.
Mark, eu aposto que.. devido aos impostos que existem aqui no Brasil, você não deve nada (nem 1 centavo) ao governo dos EUA. Tb, se você usou seu identidade daqui para abrir suas contas bancários, os bancos TÊM que te tratar como Brasileiro mesmo e não como vaca com marca dos EUA
Afinal, você nasceu aqui, né? Eu nasci lá infelizmente. Você tem sorte. Agradece a Deus.
@@@@@ Peter, for the love of God, please install a plugin, if it exists, that makes it more “user friendly” to add comments to posts AND TO BE ABLE TO EDIT THE COMMENTS. I find a typo by reading this comment. But I don’t know how to fix it??
Americans Living Abroad also can not contributions to political campaigns using their foreign address,
Yes I know that the Brazilian Banks Fenabram sent a large document explaining how they can not do certain thiungs because of Brazilian laws. But since the rest of the world seems to be catering to FATCA I am curious to see what is going to develop between FATCA and the Brazilian Banks,
@markpinetree, I don’t see in the official information any prohibition against political contributions from US citizens residing abroad with a foreign address. It might be necessary when sending a contribution to clarify that you are a US citizen, since foreign citizens who are not permanent (green card) residents of the US are not allowed to make such contributions. Have you as a US citizen with a foreign address had a contribution returned as not accepted?
http://www.fec.gov/pages/brochures/citizens.shtml#prohibited/
Probably the best way to find out what is going on between the IRS and Fenabram would be for you to contact Fenabram directly in Brazil and ask to see what they have to say. The person there who signed the letter to the US Treasury official would probably be a good place to start.
Tem que dar um jetinho.
George, if there are 5,000,000+ Americans Living Abroad this would make a difference in an election for President and perhaps even for Senators (in each State). Another two examples of what I have to accept and doesn´t seem fair do me. My pension in Brazil (Social Security), according to Brazilian laws do not pay Income Tax in Brazil. I will have to pay in the USA even knowing that Americans in France and Australia (perhaos England too) do not have to pay. Savings Accounts in Brazil have less returns because according to Brazilian Law they don´t pay Income Tax. Will have to pay in the USA. I am in a Facebbook site Marylanders Abroad. We are 60. Democrats. So far nobody seems worried about FBARs and FATCA. Strange.
Hi Mark. Thanks for sharing your story. I am also a Brazilian who got transferred by a multinational corporation to US years ago. I left my lifetime savings in Brazil as I planned to return after few years. No word was said to me about the need of reporting these assets. Now I see all this comotion about offshore accounts and the draconian penalties you may face if you voluntary disclosure. It looks like it will take some time for Brazilian banks to comply with FATCA. I am contemplating the possibility of using the money to buy some property and close the account before the banks starting reporting. I wonder if the banks will look backwards in closed accounts.
You are not alone. Many Brazilians with dual citizenship and green cards are on this trap. The ones I know -not that many – are not going for this voluntary disclosure. This indeed is stealing. They do not believe that Brazil will comply with FATCA. This is also the opinion of a Brazilian international tax lawyer. In my opinion – I am a physician – if Brazilian banks comply they will not look backwards. But I think that George from this thread will know better. Lets ask him. E – mail me: wefp.bu@terra.com.br.
Sorry, e-mail wefp.bh@terra.com.br. and Roger, not George.
This is such an amazing and very clarifying discussion. A big thanks to you guys for sharing your experiences.
I am also a Brazilian citizen living in the US as a green card holder. As Robin, I have all my lifetime savings in bank accounts in Brazil. I have never sent money earned in the US to those accounts. And as I am already taxed by Receita Federal, it is just terribly unfair having to pay taxes in the US over those assets. They existed way before my moving to the US. I don’t understand the logic. Especially this year with this freaking 8938 form. If the IRS wants to tax foreign interests, shouldn’t they consider giving tax credits for mortgages in foreign countries as well?
AndyBr.
@andy, taxes you pay to Receta Federal on your earnings in Brazil can be claimed as a foreign tax credit against US taxes on that foreign income. But of course you must report it as income.
Likewise Brazil allows its residents to claim a foreign tax credit against foreign earnings that are taxed by the foreign country. That is an improvement over Brazil’s tax policy when I lived there 35 years ago. At that time Brazil did not allow a tax credit for taxes paid to the US on income I had from dividends or interest in the US. But it did allow you to subtract the foreign tax from the gross foreign income to determine the amount subject to Brazilian income tax.
Foreign tax credits are allowed under US tax law whether there is a tax treaty or not. It makes no difference.
Robin & Andy – If you are Brazilian, then the Brazilian Constitution does everything to help you. Do your banks in Brazil even know that you have a green card and live in the US? . The IRS commissioner is leaving. There is a Presidential election coming. Let’s see how this stuff plays out.
You are very lucky because you don’t have a US birthplace. The only way for people like me to be free of this “defect” is to renounce and pay $450.
And I was going to say, but something happened with this WordPress interface… AT LEAST now you know of the potential DANGERS of having an affiliation to the USA.
@Robin and Andy,
geeez asks a good question: Do your Brazilian banks know that you do not reside in Brazil? Back 35 years ago when I returned to the US after living in Brazil, I contacted my Brazilian bank to advise them of my new US address and was informed that if I was no longer a resident of Brazil it would be necessary for the bank to close my account, I still had a house in Brazil which I was renting and needed this account to depost the rental payments I received because, with the currency controls in effect at that time, I could not excange this local currency for dollars to be removed from the country. The bank told me that only in special cases, with specific permission from Banco Central, were Brazilian banks permitted to maintain accounts for non-resident persons. So my account was closed and I had to make “other arrangements” for the Brazilian rental income.
Brazilian President Dilma is there with Obama. So far I don´t read any news that FATCA was discussed. Neither Tax or Social Security Treaties. However I have been able to discuss the USA Tax Treatment of Americans Abroad in the Democrats Abroad Brazil and in the Democrats Abroad. I am President Obama:s supporter and I want him to be re-elected but I have been discouraged to vote for him because of the way the IRS under his administration is treating Americans Abroad. I believe we all should send messages to President Obama in the White House. After all we have a potential for million of votes. I am not sure if a foreign can have a bank account in Brazil.
@Roger, thanks. I am trying to obtain how much tax was withheld (automatically) over my investments in Brazil.
One thing to add is that a couple of years ago I’ve sent to Receita Federal my definitive tax return ( or “declaracao de saída definitiva do país”) by which you tell them you’re no longer living in Brazil which basically exempt me from filing tax returns in Brazil. I am allowed to keep my investments in the bank accounts, who are automatically taxed. I am not sure how (or if) that tax return affects me somehow.
@Geez, having said that, I am not sure if the bank itself knows I no longer live in Brazil.
@Mark, Dilma and Obama are talking about cachaça and bourbon. I haven’t heard anything about what really matters to citizens raising families as far as tax returns are concerned. I am all for contacting Obama in the White House, a politician I still believe.
Furthermore, please let me know your guys’ take on these two questions:
1) My investments in Brazil are all from money I earned in Brazil. Does it make any sense for the IRS to tax them, since there has been no money transfer from US to Brazil at all?
2) I currently know about two forms:
a) TD F 90-22.1, for people with more than 10k in a foreign account. Is this one only for reporting (no taxing) ?
b) Form 8938, for people with more than 100k (if filing separately) or 150k (if filing jointly). Is this one used for taxing?
Thanks a lot folks,
AndyBr.
@AndBr, You are not taxed on Form 8398, but it is a “reminder” both to you and the IRS of what you have so you will not forget to report income produced by these assets abroad and remember to pay US capital gains when you sell foreign assets. As the value of your assets increases from year to year, you had better be able to explain to the IRS, should they audit your tax return, to account for increases in value that are not reflected in the income you have reported for tax purposes.
I agree with you it makes no sense for the US to tax you for what you have earned, saved and invested in Brazil, but unfortunately that is not the way Congress wrote the law. Even if you were born abroad to a US parent, don’t speak a word of English, have never held a US passport or even visited the US, you are subject to US income tax on all of your world-wide income because you are a US citizen.
@andyBr, os policos se falam mas a caravana pasa. I would have hope that Dijlma would have raised her voice about the US requiring Brazilian banks to report all accounts they hold for US citizens and Brazilian holders of green cards, but I know that was too much to hope for. But I still hope Brazil will Stand Tall and not allow itself to be pushed around by FATCA.
@Roger, section III of form 8938 asks you to report the interests, dividends, capital gain, etc. For each one of these, it asks you about the form & line and schedule & line where they are reported. I understand that form and schedule refers to 1040 form where the earned income is declared, hence my confusion that those are supposedly taxed.
Can I count on your kindness to let us know (I’ve searched around and lot’s of people have the same question) what should be entered in form & line and schedule & line fields of section III ?
And I am afraid Brazil will do whatever the US wants in exchange for support getting a seat in UN’s Security Council.
To obtain the tax that was charged in Brazil from our investments here is a…pain. They automatically deduct them and don´t inform how much. They say that in their reports in May and November they inform but we are not sure that this will be the total amount for the year, I have gone to banks and stayed hours trying to find this out. Then I will have to go back to get the results of my questions… Pain. To answre another question: yes, our investments in Brazil even if they are made with money earned while working here are to be reported to the IRS. They will give us a Tax Credit for the taxes we pay in Brazil. Usually both countries tax the dividends 15%. To simplify this is what I declare.
@AndyBr, Since I don’t have any investments outside of the US I assumed that this form is just an information document, but I do see that you are required to state the amounts and kinds of income from these investments on this form, and then include these amounts on the proper lines on your Form 1040. You will also want to submit Form 1116 with the foreign taxes paid in order to claim the respective foreign tax credits on your US tax return.
Since I do not have assets abroad and am not qualified to give you advice perhaps someone else can give you some guidance. I also guess you will have to use whatever information your bank does supply to provide the information the IRS requires to the best of your ability.
If you reside abroad, you are required to submit the FATCA form only if you foreign financial assets at the end of the year are $400,000 or if they exceeded $600,000 any time during the year
I would presume that the values you show in part III of this form you would carry forward to form 1040, or whatever other forms you are required to submit, for all of the separate categories of income from these financial assets: Interest, Dividends, royalties, other income Gains and/or losses, etc. But again I have no experience in completing this form.
Thanks Roger.
@AndyBR – actually the Brazilian poliiticians DO stand up to the US and other countries. The latest scandal was the Italian who killed some people during the cold war and the politicians wouldn’t extradite him to Italy. BUT you’re living in the US with a bullseye attached to your back.
They don’t say it, but US actions speak louder than words: in all of the “prosecutions” it has been with people with BIG bank accounts (millionaires) that actually **LIVE** in America (US Residents, citizens, green card holders).
If you are Brazilian, you could committ some really terrible crimes and the Brazilian government would never deport you — IF YOU LIVE IN BRAZIL. I don’t necessarily think this is a good thing, but it shows that the Constitution is here to protect the people and foreign interests be damned.
As a self employed person, even though I am close to 80 years old, I have to pay Social Security Self Employment Tax in both countries. 16% for each. Without any return in botth countries. You know… how can I pay 32% if my income for SS even before I start calculating the other taxes?… My God… how did I get into this? Then my pension in Brazil, according to the Brazilian Laws, is not taxable. The US comes and taxes me even though I am living and working in Brazil. Then I learn that they do not tax Americans Living in France on their French Pensions… Are they more Americans than I?… Can you all understand my ressentment?