Bringing Brazillain Money to the U.S.or - david ingram expert US CANADA cross border non-resident income tax help and preparatio

Hello David,
My wife is  Brazilian Citizen and recently sold her apartment in Rio.
What does she need to do to bring it up to the U.S., Taxes, etc.
Were talking about

300,000.00 BRL  which equals $184,955.27 USD


david ingram replies:

Brazil is the largest economy in the world without a tax treaty with the USA.  They did sign an 'exchange of information' agreement in 2007 but there is no tax treaty.  The exchange agreement makes it much easier for the US and Brazilian tax authorities to track people down between the two countries.  There is NO advantage to the taxpayer in this case whereas tax treaties have big advantages to the individual tax payer because it codifies tax treatment of interest, dividends, real estate, etc.

AND, I am NOT - I repeat NOT 'the' expert on Brazilian Income tax. 

Most of any Brazilian experience I had has involved Canadians.  And one of my former tax preparer partners married a Brazilian Citizen as well.  (I do consider myself equal to just about anybody when it comes to US non-resident or cross border reporting for individuals - I bow to Gary Gauvin in Dallas Texas when it comes to cross border Corporate reporting)  However, the following is just about the same answer if your wife lived in Canada as well.

Back to the Brazilian Condo -

If it sold for less than 444,000 BRL and was her principal residence and she was not married to you at the time, there is no Brazilian Income Tax and if she was not a resident of the US at the time of sale, there is NO US tax on the sale.

She can transfer the money to the US with no tax consequences.

However, if your wife was a resident of the US for the last five years and rented the condo out, Brazil would have wanted 15% tax on the profits and she should have been filing schedule E on her 1040 to report the rental income and she would have claimed the Brazilian tax as a foreign tax credit on US form 1116.

If she paid $100,000 US for the condo while a US resident and has now sold it for $185,000, she is taxable in the US on the $85,000 profit.  She would file form 4797 and schedule D to report the profit and form 1116 to claim the 15% tax she should have paid to Brazil if she was a non-resident of Brazil.

Remember as well that she could have lost money in Brazil and made  money for US tax purposes.  For instance, on August 1, 2004, 400,000 BRL was only worth $132,199.82 US dollars. She could have 'lost' 100,000 BRL and still be taxable in the US if she was a US resident.

The best way for her to get the money to the US is to have a bank transfer done because they will look after any cross border currency reporting rules.  However, you should shop around to get the best exchange rate on that amount.  The difference in exchange on that amount from one institution to another could easily be $1,000  on any single day because one institution needs Brazilian Reals for a specific purpose and pays a little premium. You are likely (might be) better off buying the US dollars in Brazil than you are buying US dollars with BRL in the US.

This is my 45th year advising American Citizens and residents on international tax matters.  Be careful when you get into the actual reporting. Very few people actually know the rules and you (or your wife) are responsible for the actual returns filed.

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This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.

IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at or  If you forward this message, this disclaimer must be included." -



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