IRS Form 8938 Explained for Brazil Asset Holders

Key Takeaways

IRS Form 8938 is mandatory for U.S. taxpayers who hold financial assets abroad—including Brazilian stocks, FIIs, bank accounts, crypto, and private investments.
Thresholds vary depending on filing status and residency; penalties can exceed $50,000 for non-compliance.
Many Americans misunderstand the difference between Form 8938 and FBAR—both may be required.
Brazilian assets must be valued in USD using year-end exchange rates; mistakes here trigger audits.
Compliance requires tracking all Brazilian accounts, investment platforms, and income sources.

Executive Summary

As more Americans invest in Brazil—whether through dividend stocks, FIIs, private equity, bonds, or digital accounts—IRS Form 8938 becomes one of the most important compliance obligations.
Part of the Foreign Account Tax Compliance Act (FATCA), Form 8938 requires U.S. taxpayers to report specified foreign financial assets once thresholds are reached.

Brazilian assets, from B3-listed equities to local bank accounts, real estate funds, crypto exchanges, and even private business interests, fall under FATCA’s scope.
The penalties for not reporting can be severe: up to $50,000, plus taxes owed, interest, and potential criminal exposure in cases of willful concealment.

This deep-dive explains exactly how Form 8938 works for Americans with Brazilian assets, how to stay compliant, how to avoid common mistakes, and when professional guidance is essential.

Market Context: Why Form 8938 Matters for U.S. Investors in Brazil

The IRS is tightening global compliance enforcement, especially in emerging markets where Americans increasingly open accounts and invest.
Brazil is one of the top destinations for U.S. investors due to:

high dividend yields,
booming real estate funds (FIIs),
attractive bonds,
rising fintech participation,
expanding startup ecosystem.

With more Americans holding Brazilian assets, the IRS expects precise and transparent reporting.
Since Form 8938 was introduced in 2012, enforcement has increased dramatically through FATCA agreements with dozens of countries—including Brazil.

Brazil participates in FATCA

Brazilian banks, brokers, and many fintechs now share account information with the IRS automatically.
This means the IRS often already knows that an American has Brazilian accounts, even if they fail to disclose them.

The rise of digital brokers and global platforms

Tools like:

Avenue,
Nomad,
Inter Global,
XP International,
Interactive Brokers’ Brazil access

have lowered barriers for Americans investing directly on B3.
However, ease of access also increases the risk of failing to report properly.

Form 8938 ensures the IRS maintains visibility over global holdings, income, and capital flows—including those in Brazil.

What Exactly Is IRS Form 8938?

Form 8938 is a FATCA-mandated reporting form required when U.S. taxpayers hold certain foreign financial assets that exceed specified thresholds.

It is filed with your federal tax return (Form 1040).

Form 8938 covers:

Foreign bank accounts
Foreign brokerage accounts
Brazilian stocks (including ADR alternatives)
FIIs (REIT-like funds)
Brazilian government or corporate bonds
PIS/FGTS accounts for dual citizens
Investment partnerships or quotas in offshore structures
Crypto held on Brazilian exchanges
Private equity and venture fund positions
Beneficial interests in Brazilian entities

Form 8938 does not replace FBAR—it is in addition to it.

Understanding the Thresholds (Critical for U.S. Investors in Brazil)

Thresholds depend on residency and filing status.

If you live in the U.S.

Single / Married filing separately:

$50,000 at year-end, or
$75,000 at any point during the year.

Married filing jointly:

$100,000 at year-end, or
$150,000 at any point during the year.

If you live outside the U.S. (including Americans living in Brazil):

Single / Married filing separately:

$200,000 at year-end, or
$300,000 at any point during the year.

Married filing jointly:

$400,000 at year-end, or
$600,000 at any point during the year.

These numbers catch many Americans off-guard, especially those who:

hold large BRL amounts in local banks,
invest heavily in FIIs,
own startup equity or quotas in Brazilian companies,
receive large dividends or capital gains,
reinvest monthly FII income.

Example

An American investor with:

R$800,000 in FIIs,
R$300,000 in stocks,
R$150,000 in cash

would exceed thresholds even before currency adjustments.

Assets That Must Be Reported (Full List for Brazil Investors)

1. Bank accounts (contas correntes, poupança, CDBs)

All must be reported, including joint accounts.

2. Brokerage accounts in Brazil

Any account at:

XP,
BTG Pactual,
Rico,
Clear,
Inter,
Avenue Brazil,
Guide,
Banco do Brasil,
Itaú Corretora
must be disclosed.

3. Brazilian stocks

All B3-listed equities count as specified foreign assets.

4. FIIs (Brazilian REITs)

FIIs are directly reportable because they are foreign mutual fund equivalents.

5. Government and corporate bonds

Tesouro Direto, debêntures, CRIs, CRAs.

6. Ownership in Brazilian companies

Includes LTDA quotas and equity in S.A.s.

7. Crypto held on Brazilian exchanges

Bitcoin and other digital assets must be reported if held on:

Mercado Bitcoin,
Foxbit,
Binance Brazil,
BitPreço,
NovaDAX,
or any Brazilian custodian.

8. Trusts, funds, and investment clubs

All considered foreign assets.

9. Pension and FGTS accounts (depending on structure)

Some require reporting, others don’t.

What Does NOT Need to Be Reported

Physical real estate owned directly (only the income, not the asset value).
Personal property (cars, jewelry, artwork).
Life insurance without cash value.

Everything else?
Almost always reportable.

The Difference Between FBAR and Form 8938 (Most Americans Get This Wrong)

FBAR (FinCEN 114):

Reports foreign bank/brokerage account balances.
Threshold: $10,000 aggregate.
Filed separately from your tax return.

Form 8938:

Reports all foreign financial assets.
Thresholds much higher.
Filed with your Form 1040.

You may need BOTH

Example:

A Brazilian brokerage account worth $25,000 requires both FBAR and Form 8938.

Mistakes here trigger the majority of FATCA audits.

How to Value Brazilian Assets for IRS Purposes

All Brazilian assets must be converted to USD using the official year-end exchange rate published by the U.S. Treasury.

Common mistakes

Using commercial rates instead of Treasury rates
Using monthly averages instead of year-end
Reporting BRL values without conversion
Forgetting to include reinvested income

Correct valuation is essential to avoid discrepancies with brokerage data collected under FATCA.

Filing Requirements: What U.S. Holders of Brazilian Assets Must Include

Form 8938 requires detailed information for each asset, including:

Name and address of financial institution
Account number
Maximum balance during the year
Year-end balance
Type of income generated (dividends, interest, gains, royalties)
Whether the asset is held individually or jointly
Whether the asset is held through an entity

This can be time-consuming, especially for investors with:

multiple brokers,
dividend reinvestment,
numerous FIIs,
day trading activity.

Most Americans underestimate the administrative burden until they start the process.

Penalties for Not Filing Form 8938 (Critical for Compliance)

Base penalty:

$10,000 for failure to file.

Additional penalties:

Up to $50,000 for continued failure after IRS notice.

Underpayment penalties:

40% on taxes owed for undisclosed income.

Criminal charges (rare but possible):

For willful nondisclosure or asset concealment.

Automatic audit flag:

Non-filing often triggers FATCA-related audits when Brazilian institutions report your accounts.

Common Mistakes Americans Make with Brazilian Assets

Assuming Form 8938 only applies if you live outside the U.S.
Thinking ADRs exempt you from reporting Brazilian stocks (they don't).
Forgetting to include FIIs as foreign mutual fund equivalents.
Not reporting crypto on Brazilian exchanges.
Mixing FBAR and Form 8938 requirements.
Reporting only income but not asset values.
Using incorrect exchange rates.
Not reporting Brazilian corporate ownership.
Ignoring joint accounts with Brazilian spouses.
Believing the IRS will never find out (FATCA makes that unlikely).

Scenario Playbook

Base Case

Most U.S. investors with moderate exposure to Brazil need to file Form 8938 annually.

Bull Case

Accurate filing prevents audits, penalties, and preserves smooth compliance status.

Bear Case

Failure to file results in tens of thousands in penalties and long-term IRS scrutiny.

Case Study: U.S. Investor with Brazilian FIIs

A U.S. resident holds:

R$450,000 in FIIs
R$200,000 in Brazilian dividend stocks
R$50,000 in a Brazilian checking account

Converted to USD, the total exceeds FATCA thresholds.

They must file:

Form 8938
FBAR
Schedule B
Form 1116 for tax credits (if applicable)

This is the typical profile of a U.S. investor on B3.

How to Stay Fully Compliant

Track all Brazilian accounts and assets throughout the year.
Download year-end statements from brokers and banks.
Convert BRL balances using the Treasury exchange rate.
Maintain a spreadsheet of maximum balances.
Confirm whether FBAR is also required.
File Form 8938 with Form 1040.
Work with cross-border tax specialists if complexity increases.

FAQs

1. Do I need Form 8938 if I already filed FBAR?
Yes. They serve different purposes.

2. Do FIIs count as foreign financial assets?
Absolutely—they must be reported.

3. Do I report income or asset value?
Both.

4. Do real estate properties in Brazil count?
Not directly, unless held through a company.

5. Do I need to report crypto?
Yes, if held on Brazilian exchanges.

Bottom Line

IRS Form 8938 is one of the most important—but misunderstood—compliance requirements for Americans with Brazilian assets.
Whether you hold dividend stocks, FIIs, government bonds, crypto, or bank accounts, the IRS expects precise, transparent reporting.

Understanding thresholds, filing requirements, valuation rules, and penalties is essential for avoiding fines and long-term IRS scrutiny.
For U.S. investors who embrace compliance discipline, Brazilian assets remain highly attractive—offering strong yields, growth potential, diversification, and inflation protection.

Form 8938 doesn’t diminish the opportunity.
It simply ensures you report it correctly.

Disclaimer & Sources

Not investment advice.
Sources: IRS, FATCA Regulations, U.S. Treasury Exchange Rate Tables, FinCEN, Brazilian Central Bank, B3, Bloomberg.