Taxes!!!

Ryan and I recently received out estimated tax payments- OUCH!  Thank goodness Brazil and US have a reciprocity agreement which means no double taxation.  However, it works in the sense that you request a tax refund at the end of the year for the taxes you overpaid, so you pay up front and pray to get your money back later.  My company contracted KPMG for this service and if you have them too, well, I'm very sorry for you and I both.  Make sure you double check their work, ask questions, and keep track of tax filling deadlines yourself.
Ok, now for the helpful tips:

• Income earned outside of Brazil is subject to Brazilian tax
• Rental Income
• Salary
• Interest and Dividends
• Brazil uses a graduated system for taxation- same process as the US, but different rates
• Estimated taxes are due by the last day of the month following the month the income was earned
• Example: Taxes on income earned in July is due by August 30
• Payable at any Brazil bank (if you have cash) or via internet banking with Brazil banks only
• Rental Income is taxable
• No deductions for mortgage interest
• Yes, deductions for real estate taxes and management company fees
• Housing & Relocation Allowance
• Taxable in Brazil if you were in the country with the intent of finding a job, apartment, etc. when it was paid.  This means you may have to pay taxes in the US and Brazil, so make sure tax coverage is in your relocation contract
• Beware of the date on your workbook
• You are taxable from the moment you begin employement per your Brazil workbook, officially Carteira de Trabalho
• If you are out of the country when you are contracted to work, according to your workbook, the Brazilian government will look to the prior time you entered the country to start taxing you.
• Example: Arrive in Brazil July 10, look for apartment, leave Brazil August 20.  Contracted September 1 (per workbook) and arrive September 6 to begin work.  Brazil will expect you to pay taxes back to July 10- the date you arrive with the "intention" of working.
• To be safe, arrive on the 1st of the month
• Be your own advocate
• Tax experts hired by your company want to reduce risk of a tax audit, which is good, but they have no incentive to help you tax plan.  So, they ask you to pay the maximum amount to the Brazilian government which is least risky.
• Be cautious, use common sense, and ask questions.

Click here for Tax Information from HSBC & Deloitte

Click here for Brazil Tax Rates 2010

Click here for TOAN- a law firm with tax expertise in Sao Paulo, Brazil.

Good luck!  Feel free to drop us a line if you have questions- we've probably been through it before and can help.

Lisa & Ryan