If you’re a U.S. citizen or green card holder living in Israel, understanding which tax forms to file can be confusing. Should you submit Form 1040? Does Form 1120F apply to you? This guide will walk you through the most important U.S. tax forms required for compliance with the Internal Revenue Service (IRS).

FATCA Reporting: FBAR & Form 8938

The Foreign Account Tax Compliance Act (FATCA) was enacted in 2013 to combat tax evasion. It requires U.S. citizens, green card holders, and certain entities to report foreign financial accounts and assets to U.S. authorities.

FBAR (FinCEN Form 114)

• Must be filed if the cumulative balance of foreign accounts exceeds $10,000 at any point during the tax year.
• Applies to bank accounts, pension funds, investment accounts, life insurance policies with cash value, and more.
• Filed online through the Financial Crimes Enforcement Network (FinCEN).
• Due Date: April 15 (automatic extension to October 15).
• Penalties: Failure to file may result in fines of $10,000 per violation, or up to 50% of the account balance for willful non-compliance.

Form 8938 (Statement of Specified Foreign Financial Assets)

• Similar to FBAR but filed with your tax return (Form 1040).
• Required if foreign assets exceed:
  • $50,000 (single) or $100,000 (married) for U.S. residents.
  • $200,000 (single) or $400,000 (married) for taxpayers living abroad.
• Penalties: $10,000 for failing to file, up to $50,000 for continued non-compliance.

Forms W-9 & W-8BEN

Banks in Israel may require these forms for FATCA compliance:

• Form W-9: Required for U.S. citizens and green card holders to confirm U.S. taxpayer status.
• Form W-8BEN: Used by non-U.S. citizens to certify they are not U.S. taxpayers and claim treaty benefits.
• Failure to submit these forms can result in 30% tax withholding on certain U.S.-sourced payments.

Form 1040: U.S. Individual Income Tax Return

All U.S. citizens and green card holders must report worldwide income, regardless of residence.

• Filing Thresholds: Vary by filing status. Self-employed individuals must file if they earn $400 or more.
• Foreign Earned Income Exclusion (FEIE): Up to $120,000 (for 2023) may be excluded under Form 2555.
• Foreign Tax Credit (Form 1116): Avoid double taxation by crediting foreign taxes paid.
• Deadlines:
  • April 15: Standard deadline.
  • June 15: Automatic extension for Americans abroad.
  • October 15: Additional extension available.

Form 1120 & 1120S: U.S. Corporate Tax Returns

For businesses registered in the U.S.:

• Form 1120 (C-Corp): Reports corporate income, expenses, and taxes.
• Form 1120S (S-Corp): Used by corporations electing pass-through taxation.
• Deadlines:
  • April 15: U.S. corporations.
  • June 15: Foreign corporations.
  • Extensions: Available until October 15 (U.S. corps) or December 15 (foreign corps).

Form 1065: Partnership Tax Return

• Required for partnerships conducting business in the U.S.
• Partnerships do not pay taxes; income is passed to partners via Schedule K-1.
• Foreign partners: May require Form 8805 for tax withholding.
• Deadlines:
  • March 15: Standard.
  • June 15: Foreign partnerships.
  • September 15: Extended deadline.

Form 1099 Series: Reporting Various Income Types

Forms 1099 report income paid to individuals or businesses, including:

• 1099-INT: Interest income.
• 1099-DIV: Dividend income.
• 1099-MISC: Rent, royalties, or non-employee compensation.
• 1099-NEC: Payments to independent contractors.

Both the payer and recipient must report this income to the IRS.

Conclusion

Navigating U.S. tax compliance while living in Israel is complex. Failure to file the correct forms can result in fines, audits, and legal consequences. If you’re unsure about your tax obligations, seeking professional assistance is highly recommended.

Here at MasAmerica Our experienced U.S. tax advisory team in Israel will help guide you. Contact us today for expert tax support tailored to your unique situation.