Filing Requirements

WHO MUST FILE?

  • AMERICAN CITIZENS/GREEN CARD HOLDERS (PERMANENT RESIDENTS) – Whether they are salaried or self-employed, they must file an annual tax return. They must report all forms of income, wherever earned – whether or not exempt from tax in Israel. Additionally, they must report certain financial assets.
  • FOREIGN INVESTORS AND PROMOTERS IN THE US REAL ESTATE MARKET Individual investors or those who participate as a part of a group (i.e., shares in an llc), are generally required to file federal, state, and sometimes local returns.

WHAT IS A FILING OBLIGATION?

Americans have been required to file returns to report their worldwide income since 1913. Starting in 1974, there has been an additional filing requirement regarding financial accounts owned outside of the United States.

WHY NOW?

Starting in September 2016 many Israeli financial institutions are obligated to report financial information regarding American Citizens and Green Card Holders to the IRS. We advise that you engage an experienced professional to help you organize and prepare the required filings.

Even if you have not filed in the past, there are currently amnesty programs available that will allow you to “clean up” your past record and to begin filing properly from now on.

WHAT IS REPORTED?

In addition to reporting their worldwide income, American Citizens and Green Card Holders must file an additional report relating to financial accounts that they own outside of the United States. Examples of these accounts are: bank accounts, pension funds, educational (“hishtalmut”) funds, managers insurance funds, and certain holdings in foreign entities.

NOTE: Starting in September 2016 many Israeli financial institutions are obligated to report financial information regarding US Citizens and Green Card Holders to the IRS. Now is the time to complete and file any missing returns or reports before you receive a notice or audit request from the IRS. By then it will be too late!>/strong>

WHEN TO FILE?

April 15:

  • Due date of Federal income tax returns for US residents.
  • Due date of most State income tax returns.
  • If you will owe tax this year, make your payment before this date to avoid interest.

 

June 15:

  • Due date of Federal income tax returns for US citizens living abroad.
  • Make your tax payment before this date to avoid late payment penalties.

 

October 15:

  • Extended due date of Federal income tax returns and FBARs.

PENALTIES AND SANCTIONS

The US tax authorities (IRS) can impose penalties on American Citizens and Green Card Holders who do not report their income and their overseas financial assets. Per Federal law, these penalties can range from tens of thousands of dollars into the millions. Failure to file these forms and returns is also a criminal offense, so there can be referral for prosecution. Based on recent legislation, failure to file, in some circumstances, can even lead to revocation of the individuals US passport.

In order to avoid these consequences, please contact us.