Alimony is Now Tax Free

Income tax paid to the Brazilian government between 2018 and 2022 over alimony payments can now be recovered. Based on a recent decision of the Federal Supreme Court (Supremo Tribunal Federal or STF), Brazil’s tax authority (Receita Federal) is giving taxpayers the opportunity to amend their prior tax return declarations and request refunds.

For years, alimony payments were, in essence, taxed twice. First, the income of the person paying the alimony was taxed. Then, the recipient of the alimony paid taxes on the amount received because it was considered income.

But according to the Federal Supreme Court, this is classic double taxation. Recipients of alimony payments shouldn’t have to pay income tax on what they receive. So now, anyone who paid taxes on alimony within the last five years can amend their tax return declarations and recover any taxes they overpaid.

The amendment requires changing the income from the taxable field to the exempted field. After filing the amendment, if you have the right to a refund, you may still need to file one more document with the Receita Federal. Otherwise, if you’ve received a refund in the past, the extra payment may automatically be deposited in your bank account.

Consider hiring an experienced tax advisor to help you put together the necessary documents and information to properly file your tax return and, if applicable, an amendment. The tax filings aren’t as easy as they may seem, particularly for foreigners. The last thing you’ll want to do is overpay Uncle Sam.