Real-Estate Investor
The recent downturn in the US economy has made American real estate a more attractive investment opportunity than ever before. As a result, many Israelis, whether individually or through investment funds, have entered the US real estate market.
However, just as in any investment, the US government is a guaranteed partner in the profits generated from real estate income. Therefore, it’s crucial to engage in proper tax planning for real estate investments.
This obligation to report applies to all investors—whether you’re an individual investor, part of an entrepreneurial venture, involved in an investment fund, or running an Israeli company. Anyone participating in US real estate investments is subject to the same reporting requirements.
If you invest in US real estate, it’s essential to understand the tax implications and ensure that all required filings are made accurately and on time.
Generally, yes. It depends on the various tax rates.
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS). See the article What is a Tax ID?
American Citizen/GreenCard Holder
In 2011, the US Congress passed the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks that do business with the US to report information about American citizens who hold accounts with them.
Israeli banks have implemented procedures to verify the citizenship status of their account holders and are obligated to report US citizens to the IRS.
If your bank has asked you to sign forms, they are likely confirming whether you are a US citizen or have any reporting obligations to the US tax authorities (IRS). These forms are part of the bank’s process to comply with FATCA regulations and ensure they meet their reporting requirements.
Renouncing US citizenship is a significant decision with serious legal and tax implications. If you choose to renounce your citizenship, you must go through a formal process at a US embassy or consulate. This involves submitting a renunciation request, attending an interview, and completing the necessary paperwork.
However, renouncing US citizenship does not automatically eliminate all of your tax obligations. The US taxes its citizens on their worldwide income, regardless of where they live. Even after renouncing your citizenship, you may still have tax responsibilities, including the potential for an exit tax (also known as the expatriation tax).
Given the complexity of this process, it is highly recommended that you consult with a US tax advisor in Israel or an immigration lawyer who specializes in expatriation.
Failing to file US tax returns is not in compliance with US law, and as an American citizen, you are required to file. However, there are options available for individuals who have not reported their income and wish to bring their filings up to date. To determine the best course of action and to minimize potential penalties and fines, it is strongly recommended that you consult a tax professional specializing in expatriate tax matters.
No, the treaty between Israel and the US does not exempt you from the requirement to file a US tax return. US citizens are required to report their worldwide income to the IRS, even if they reside outside the US. While the treaty may allow certain types of income to be exempt from US taxes, the filing obligation still applies.
In principle, US citizens and residents can claim a foreign tax credit to offset their US tax obligations for income taxes paid in the country where the income was earned. This credit helps reduce the potential for double taxation, meaning you may not have to pay taxes twice on the same income.
However, the rules for calculating the foreign tax credit can be complex, and in some cases, it may not fully offset your US tax liability. To ensure compliance and make the most of available tax benefits, it is highly recommended to consult with a tax professional.
Yes. Citizens, residents, and those with the status of permanent residents (green card holders) of the US all must report their income.
In 2011, the US Congress passed the FATCA Bill, requiring all foreign banks that do business with the US to report on American citizens who have accounts with them.
Israeli banks have taken several steps to determine the citizenship of their account holders, and they are required to report to the US on these citizens.
If you were asked to sign forms, it means they are trying to determine whether you are an American citizen who must report to the American Tax Authorities (IRS).
In 2011, the US Congress passed the FATCA Bill, requiring all foreign banks that do business with the US to report on American citizens who have accounts with them.
Israeli banks have taken several steps to determine the citizenship of their account holders, and they are required to report to the US on these citizens.
If you were asked to sign forms, it means they are trying to determine whether you are an American citizen who must report to the American Tax Authorities (IRS).
Generally, yes. It depends on the various tax rates.
You are not in compliance with US law and you need to file. That being said, there are several options and plans for those who have not yet reported and want to make up their obligations. To choose the proper course of action for you, with the goal of minimizing penalties and fines, please contact us.
If the sum of the highest balances of all of your financial accounts (banks, pensions, investment portfolios, etc.) outside the US exceeded $10,000 during the course of the previous year, you must report them by June 30.
No! The treaty does not exempt you from reporting. The requirement to file annual reports remains even if it does not result in payment. Therefore, preparation and advance tax planning, while getting professional advice, will lead to maximum tax savings.
In 1975, a treaty to prevent double taxation and to prevent tax evasion took effect with respect to income tax between Israel and the US. US citizens, even if they do not live in the US, must report their incomes from outside the US to the American tax authorities. These incomes are often exempt from US tax. Residents of Israel who are exempt from US tax with regard to certain income generally are required to pay Israeli tax on that income.
Yes. Citizens, residents, and those with the status of permanent residents (green card holders) in the US all must report their income.
Yes there are many individual expenses that are not recognized in Israel that are deductible for US tax purposes. When we prepare a return, we determine the best way to calculate your tax looking at all of the information that you provide and then by asking the right questions. It is our job to make sure that you pay only what you are required by law to pay and not a penny more. Selecting the expenses and requesting the refund are part of the process our clients’ undergo.
In principle, a US resident can obtain a credit offsetting the US tax obligations for taxes paid on income outside the US in the country where the income was generated. However, the rules for calculating the credit are sometimes complicated and do not always result in a complete offset of the US taxes. Similarly, the fact that tax was withheld at source in another country does not necessarily ensure that the foreign tax is eligible to be deducted.
No! The American taxation system includes citizens and residents, regardless of where they live or work. If you have American citizenship, or if you have a green card, you must file annual returns.
Yes. As a resident of the US, you are required to report your income from all over the world, wherever it is. For example, if you own an apartment in Israel, and you rent out the apartment, income from the rental must be included in the annual US tax return. So too if you have interest income, dividends, or capital gains from Israeli banks.
In principle, yes. If you meet the specific conditions to receive the refund. We emphasize that the IRS is closely examining returns from Israel claiming the child tax credit. However, if you are entitled to the credit and we collect all of the proper documentation for our file, there is no reason not to request the refund. You are entitled to it like any other US citizen.
Yes. All American citizens must file an American tax return annually, which includes income from all over the world. In a case where an American citizen paid taxes to another tax authority, he may, under certain conditions, request a tax credit for taxes paid.
