First, identify the investment route
“Investing in Brazil” can mean different things: a U.S.-listed security in a U.S. brokerage account, a fund organized abroad, or an account held at a Brazilian institution. Those routes do not create the same tax or reporting questions.
U.S.-listed ADR
A Brazilian company’s American depositary receipt held at a U.S. brokerage
Consider dividend reporting, any foreign tax withheld, depositary fees and whether the payment meets the rules for qualified dividends. U.S. exchange listing alone does not decide the tax treatment.
U.S.-domiciled ETF
A U.S.-organized fund with exposure to Brazil
Start with the fund’s U.S. tax documents and distributions. Its Brazilian exposure does not by itself make the fund a foreign financial account or a foreign fund for PFIC purposes.
Brazilian bank or brokerage account
An account maintained at a financial institution in Brazil
In addition to U.S. tax on income, foreign-account reporting may apply. FBAR and Form 8938 have separate rules, thresholds and exceptions; keeping records of account values matters.
Foreign-domiciled fund
A fund organized outside the United States, wherever it invests
U.S. investors may need to investigate the passive foreign investment company (PFIC) rules and Form 8621. Domicile and legal structure matter; a ticker or country of exposure is not enough to determine status.
U.S. tax still applies to worldwide income
U.S. citizens and resident aliens generally report worldwide income, including relevant foreign-source income. Paying tax in Brazil does not automatically remove a U.S. filing or tax obligation. A foreign tax credit may be available for certain foreign income taxes, subject to eligibility rules, limits and coordination requirements; it is not automatic tax relief.
The IRS explains the general rule for U.S. citizens and resident aliens and the conditions for the Foreign Tax Credit. Form 1116 is commonly used to claim a credit, though exceptions and other rules can apply.
FBAR and Form 8938 are different
These forms serve different laws and use different tests. A person can have one filing requirement, both or neither, depending on the facts. They are not interchangeable, and filing one does not replace the other.
| Question | FBAR (FinCEN Form 114) | Form 8938 |
|---|---|---|
| What it covers | Certain foreign financial accounts in which a U.S. person has a financial interest or signature authority, subject to exceptions. | Specified foreign financial assets held by specified persons, under the applicable rules. |
| General threshold for an individual living in the U.S. | The aggregate maximum value of foreign financial accounts exceeds $10,000 at any time during the calendar year. | Generally, more than $50,000 at year end or $75,000 at any time for an unmarried individual or married filing separately; $100,000 at year end or $150,000 at any time for married filing jointly. |
| Where it is filed | Electronically with FinCEN, separate from the income tax return. | Attached to the federal income tax return when required. |
The FBAR $10,000 test applies to the combined maximum values of reportable foreign accounts, not to each account separately and not to the amount you have available to invest. Form 8938 thresholds vary by filing status and where you live. Exceptions, asset definitions and valuation rules matter. A U.S. brokerage account holding a foreign security is generally not, for that reason alone, a foreign account for FBAR; IRS guidance also explains that assets held in a U.S. financial account generally are not reported on Form 8938 on that basis.
Compare the IRS pages for FBAR and Form 8938 requirements and Form 8938 questions. Check current instructions for your filing year and circumstances.
Foreign funds may raise PFIC questions
A foreign corporation or fund can fall under the passive foreign investment company rules. The general tests include at least 75% passive gross income or at least 50% of average assets producing, or held to produce, passive income, subject to detailed definitions, exceptions and elections. If PFIC rules apply, Form 8621 may be required and the tax treatment can be complex.
Do not infer PFIC status from a fund name, ticker or the country where its holdings are located. Check where it is organized, how it is classified and the current IRS Form 8621 instructions with a qualified tax professional.
Dividend treatment depends on the details
Some dividends from foreign corporations may qualify for preferential U.S. rates when the issuer and shareholder meet specific requirements. The rules include issuer eligibility and holding-period tests, and additional exclusions apply. A U.S. listing or ADR does not by itself guarantee that a dividend is qualified. See IRS Publication 550 and confirm how the payment is reported for the relevant tax year.
A useful checklist for your preparer
- Identify the account institution and country, and the legal domicile and type of each fund or security.
- Keep annual tax statements, dividend records, foreign tax withheld, fees, trade confirmations and currency conversion details.
- For foreign accounts, record the account owner, signature authority, institution and maximum value during the year.
- Ask whether foreign tax credit rules, FBAR, Form 8938, PFIC rules or qualified-dividend requirements apply to your facts.
- Use the tax year’s current IRS instructions and disclose relevant information to your preparer.
Important limits
This guide is general educational information, not tax, legal or investment advice. It does not calculate tax, determine whether a particular security is a PFIC, or tell you which investment or account to choose. Rules can change, and state tax law, residency, entity ownership and other facts may affect the result. Brazil’s tax treatment is outside this guide. Consult a qualified U.S. tax professional familiar with cross-border investments.
Official IRS sources
- U.S. citizens and resident aliens abroad
- Foreign Tax Credit
- U.S. income tax treaties, A to Z
- FBAR filing information
- Comparison of Form 8938 and FBAR requirements
- Questions and answers about Form 8938
- Instructions for Form 8621 (PFICs)
- Publication 550: investment income and expenses
IRS sources checked October 7, 2026. The United States’ current treaty list does not show an income tax treaty with Brazil; see the IRS treaty list. The absence of an income tax treaty does not, by itself, determine whether a foreign tax credit is available.