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The decision to immigrate to the United States involves much more than choosing a visa and gathering documents. Pre-move financial planning is a step that, when overlooked, can cost tens of thousands of dollars in unnecessary taxes, penalties for failing to meet tax obligations, and complications that can drag on for years. Understanding how American taxation works before becoming a tax resident is the first step toward a smart and financially healthy transition.
When Tax Residency Begins
The United States determines tax residency by two main criteria: the green card test and the substantial presence test. Under the first, any green card holder is automatically considered a tax resident from the date of admission as a permanent resident. Under the second, a person who spends at least 31 days in the current year and a weighted total of 183 days over three years (counting all days in the current year, one third of the days in the previous year, and one sixth of the days in the year before that) is also classified as a tax resident.
The milestone is decisive: from the moment tax residency is established, the U.S. government taxes the taxpayer’s worldwide income. Salaries, rents, dividends, interest, and capital gains earned anywhere in the world must be included in the U.S. income tax return. This includes income from real estate, financial investments, and businesses held in Brazil.
Capital Gains and Assets
Capital gains taxation in the U.S. in 2026 follows three brackets for assets held for more than one year: 0% for taxable income up to $49,450 (individual return) or $98,900 (joint return), 15% for the intermediate bracket, and 20% for income above $545,500. On top of these rates, high-income taxpayers may pay an additional 3.8% Net Investment Income Tax (NIIT). Short-term capital gains (assets held for one year or less) are taxed as ordinary income, with rates reaching up to 37%.
The practical implication is direct: if a Brazilian owns a property in Brazil purchased for R$ 500,000 that is now worth R$ 1.5 million, selling this property before becoming a U.S. tax resident does not create a U.S. tax obligation. If the sale occurs after, the R$ 1 million gain will be taxable by the U.S. Internal Revenue Service. The same logic applies to stocks, investment funds, business interests, and other assets with accumulated appreciation.
Therefore, the window between the decision to immigrate and the establishment of tax residency is the most valuable period for asset restructuring. Assessing which assets are worth liquidating, transferring, or reorganizing before the move can result in significant savings.
FBAR and FATCA
U.S. tax residents with financial accounts abroad face two distinct and cumulative reporting obligations. The FBAR (FinCEN Form 114) must be filed by anyone who, at any point during the year, held an aggregate balance exceeding $10,000 in foreign accounts. This includes checking, savings, investment accounts, and even accounts over which the taxpayer has only signature authority. The filing deadline is April 15, with an automatic extension to October 15.
The FATCA (Form 8938, attached to the income tax return) applies when the value of foreign financial assets exceeds $50,000 on the last day of the year (or $75,000 at any time) for U.S. residents. For residents abroad, the thresholds rise to $200,000 and $300,000, respectively. Couples filing jointly have double the limits.
Penalties for noncompliance are severe. The fine for failing to file the FBAR can exceed $16,000 per non-willful violation and reach 50% of the account balance in cases of willful violation. Failure to file Form 8938 results in a $10,000 fine, which can increase to $60,000 in case of continued failure after IRS notification.
Brazil and the U.S. Without a Treaty
Unlike dozens of other countries, Brazil and the United States do not have a bilateral treaty to avoid double taxation of income. This means there are no reduced withholding rates, tax residency tie-breaker rules, or reciprocal exemptions that a treaty would normally provide.
The main mechanism available to avoid double taxation is the Foreign Tax Credit, which allows the taxpayer to deduct from U.S. tax the amount paid to the Brazilian tax authorities on the same income. However, the credit is limited to the amount of tax that would be due in the U.S. on that specific income, which does not always completely eliminate the double burden.
The two countries maintain a Totalization Agreement (in effect since 2018) that avoids double social security contributions: those who pay INSS in Brazil on certain work do not need to pay Social Security in the U.S. for the same job, and vice versa. There is also an intergovernmental FATCA agreement that facilitates the exchange of banking information between the two tax authorities.
Tax Advantages of Florida
Florida is one of nine U.S. states that do not charge state income tax, a protection guaranteed by Article VII, Section 5 of the state constitution, which requires a 60% supermajority of voters to be changed. The state also does not levy inheritance or gift taxes at the state level.
For immigrants, this represents a concrete advantage. A professional with an annual income of $150,000 in Florida pays only federal tax, while the same professional in California would pay up to an additional 13.3% in state tax, and in New York, up to 10.9% state plus 3.876% municipal tax. The savings can exceed $15,000 per year depending on the income bracket.
The tax burden in Florida falls on property tax (tax on real estate, moderated by the homestead exemption for primary residence), sales tax (6% state, with possible local additions), and taxes on real estate transactions. This structure especially benefits professionals with high earned or investment income.
Pre-Move Checklist
Effective financial planning before immigration should include the following steps, preferably started 6 to 12 months before the move:
- List all assets with accumulated capital gains (real estate, stocks, funds, business interests) and assess the convenience of liquidation before U.S. tax residency
- Document the fair market value of all assets on the date of establishing tax residency, as this value will serve as the cost basis for future sales in the U.S.
- Map all financial accounts held in Brazil for future FBAR and FATCA compliance
- Consult an accountant or tax advisor specializing in Brazil-U.S. cross-border issues
- Review the structure of Brazilian investments, as certain vehicles (such as Brazilian investment funds) may be classified as PFICs (Passive Foreign Investment Companies) in the U.S., subject to punitive taxation
- Organize supporting documentation for income, assets, and taxes paid in Brazil for potential use of the Foreign Tax Credit
- Consider closing or restructuring Brazilian companies, especially if classified as Controlled Foreign Corporations (CFC) under U.S. law
The intersection between financial planning and the immigration process requires coordinated attention. Decisions made before the move have a direct impact on the net worth that the immigrant actually builds in the United States. The cost of specialized tax consulting is almost always lower than the cost of mistakes that could have been avoided with proper planning.
Victoria Harper
Editor-in-Chief
Leading journalism and editorial content at Visto n’ Visa, Victoria helps make immigration topics clear, trustworthy, and easy to understand. Her focus is on delivering useful, human, and relevant content for people exploring new paths abroad.
