Who Must File?
-
U.S. Citizens & Green Card Holders (Permanent Residents)
- Required to file an annual U.S. federal tax return, even if they live abroad.
- Must report all income worldwide, including non-U.S. sources, even if it is exempt in another country (e.g., Israel).
- Must report foreign financial assets, such as bank accounts, pensions, and investment holdings.
-
Foreign Investors & Promoters in the U.S. Real Estate Market
- Individuals or groups investing in U.S. real estate (e.g., LLC shareholders) must file federal, state, and possibly local tax returns.
What is a Filing Obligation?
- U.S. citizens and Green Card holders have been required to file returns reporting their worldwide income since 1913.
- Additional reporting for financial accounts outside the U.S. has been required since 1974.
Why Now?
- Since September 2016, Israeli financial institutions have been obligated to report financial information of U.S. Citizens and Green Card Holders to the IRS.
- If you haven’t filed in the past, now is the time to correct your filings. There are amnesty programs available that allow you to clean up your record and begin filing properly before you receive a notice or audit request from the IRS.
- Missing the deadline could result in penalties or legal consequences.
What Must Be Reported?
- Worldwide income, including:
- Salaries
- Business income
- Investment income (interest, dividends, capital gains)
- Rental income from real estate
- Foreign financial accounts, including:
- Bank accounts
- Pension funds
- “Hishtalmut” funds
- Manager’s insurance funds
- Certain holdings in foreign companies
Key Deadlines
📅 April 15 – U.S. residents: Federal & most state tax returns due.
📅 June 15 – U.S. citizens living abroad: Federal tax return due.
📅 October 15 – Extended deadline for Federal tax returns & FBARs.
💡 Note: If you owe taxes, you must pay by April 15 to avoid interest and late payment penalties.
Penalties & Consequences
🚨 Financial Penalties – Failure to file or report can result in fines ranging from tens of thousands to millions of dollars.
🚨 Criminal Charges – Not filing can be considered a criminal offense, leading to possible prosecution.
🚨 Passport Revocation – Under recent legislation, non-compliant taxpayers may have their U.S. passport revoked.
📌 Act Now – It is best to file any missing returns before receiving a notice from the IRS. Be in touch with MasAmerica expert US tax advisors in Israel to file your returns.
