Israel recently celebrated her 70th birthday. While young in country years, that is an age when many have reached a stage in their lives where one’s perspective and priorities are shifting. There is an increased focus on health, as well as proper management of financial resources. Socially, many have shifted from the rhythms and routines of their professional lives into new activities and interests. The bottom line is that they face significant challenges. While some are fortunate – being in good health, with robust finances and friends and activities – others face restricted independence, loneliness, and limited resources.
There are currently more than 85 startups in Israel that are developing products to help the elderly live longer and less lonely lives. These products may help do everything from overcoming certain handicaps (like failing eyesight) to emergency monitoring, to preventing or minimizing hip fractures from falls.
Temi, located down the street from the MasAmerica offices, has developed a “telepresence-robot” assistant that can follow its owner from room to room placing video calls, controlling smart home devices, reading to the person – and performing a surprising number of useful tasks – aside from being a powerful tool for loved ones to stay connected to a relative or friend who might have limited mobility. The company founder, Yossi Wolf, states that he was inspired to create the device when he visited his grandmother and ”noticed how shaky her hands were and how difficult it was for her to hold a cup of tea. I then watched her try to operate her smartphone – she had trouble with that, too. At that moment, I decided to devote my life to creating Temi for her.” It is amazing what Temi seems able to do, and the affordable price $1,500 for something that could impact the quality of life so profoundly, is equally incredible.
Retired and elderly US taxpayers residing in Israel present a variety of challenges and some interesting issues. Many are receiving distributions from the US and/or foreign retirement, pension, employee savings and welfare plans. Different types of distributions have unique tax treatments and reporting obligations. Some payments are fully taxable, some are partially taxable and some may even be fully exempt from tax. Additionally, these plans and the distributions may have to be reported on other tax forms on the return to avoid penalties.
A good example of a payment that is fully exempt from tax for a US citizen residing in Israel is Social Security. Under Article 21 of the US-Israel Tax Treaty, “Social security payments and other public pensions paid by one of the contracting States, for example, the US to an individual who is a resident of the other Contracting State, for example Israel, shall be exempt from tax in both Contracting States.” [Our comments in bold].
If you are nearing or at retirement you should consult with MasAmerica’s tax attorneys and accountants to make sure that you have a complete understanding of how US taxes will impact your retirement. Strategic tax planning is an important complement to good financial planning.
