Thursday, November 15, 2007

The Tax Office

5 of the Ninth Month 5768

The tax office seemed to be the easiest office of the Israeli government to deal with.

I first encountered it three years into my "journey," as I like to call it.

Up until then, I was either exempt from taxes or my taxes were taken care of automatically. The first time people have to go to the tax office is when they have more than one source of income.

My fourth year in Israel, I had more than one job. I was teaching junior high school, as well as adult, night school. This is often the case with with teachers in Israel, at least when starting out. It is necessary to find two, sometimes three, part-time jobs in order to put together the equivalent of one full-time position.

By the way, two offices in the center of the country are located here:

Israeli Tax Authority
Finance Ministry
Kanfei Nesharim Street 66

Giv'at Sha'ul, almost to Har-Nof
Greater Tel-Aviv Area
Income & Property Tax Dept.
Finance Ministry
Menachem Begin Way 125

Just south of the Azrieli Center

The process is fairly easy. Make sure to have the most recent pay stubs from all of your sources of income, tlushim in Hebrew. If you left a job in the middle of the year, you must make sure to have a letter from each previous employer, stating the final date of your employment. This will serve as "proof" that you are no longer employed there.

As always, don't forget your Te'udat Zehut (Israeli ID card). Bring your Te'udat Oleh (Immigrant ID & rights booklet) as well. You may be entitled to a tax break or even an exemption, depending on how long you have been in the country.

In the event you live in a development area, make sure you bring in proof of residence, either a Ishur Toshav or a Ishur Megurar. The address displayed on your ID card is not sufficient. This will entitle you to an additional tax credit. These days development areas are located only in the Negev Desert or the Gallilee. But double check.

Always xerox your tlushim and other documents. You will need to show the originals to the clerk, provide xerox copies. This is the general rule for government offices in Israel.

As soon as you are employed by more than one institution, you must make certain to go into your local tax office and report it. Otherwise you will find that the first paycheck you receive from your new employer will be 50 percent of what you thought it would be.

The tax authority automatically takes 50 percent out in tax, unless you show up with the documents to show that should be paying less than that. Most importantly, the deadline for taking care of this process in December 31, not April 15 of the following year. Meet this deadline, unless you want to go through the much longer and involved process of requesting a tax return from a past tax year.

In case you don't go in right away, don't worry. You should receive any over payments you may have made in your next paycheck. This includes any moneys owed to you after the readjustment of your tax rate.

This is the extent of my experience. If you have more complex situations, such as income from abroad, dividends, capital gains, interest from savings accoutants, etc., it would be well worth your while to consult an accountant. There are plenty of accountants who are certified both in Israel and in the U. S. {or Canada), who can advise you as to how to jungle your particular circumstances.

JANGLO [Jerusalem Anglo Protexia]
E-Group is a good place to ask other English-speaking immigrants for recommendations of accountants, or for anything else for that matter.

U. S. Tax Filing

And speaking of taxes, my first year in Israel, I knew I was expecting a huge U. S. tax refund. So, I wanted to make sure to file my U. S. tax forms. First I made sure the have my W-2 forms forwarded to Israel. I found it easy to renew my U. S. mail-forwarding order (which only lasts three months, I think). I had brought extra forms from the U. S. Nowadays, you can get can print them out from the U. S. Postal Service Website.

I was able to pick up my Federal tax forms at the U. S. Embassy in Tel-Aviv. Nowadays, they can be downloaded from the Internal Revenue Service website. You may even choose to e-file your taxes. U. S. tax returns are delivered to Israel by courier, and then sent our through regular Israeli mail. Generally, checks drawn on foreign banks take a couple of weeks to clear. My tax return was cleared by my bank immediately, as it was easily identified as a U. S. government check. For some reason, though, I strongly suspect that this is not the rule, but the exception, and may have even been a mistake on the part of my teller. After 10 years, it still sounds too good to be true.

And, of course, do not forget to avoid the bank on Sundays and U. S. [or you other country of origin's] holidays. Most Israeli banks will not process your checks when the bans they are drawn from are closed.

It may seem like a lot of information to remember. Still, though, the Israeli tax office was a pretty straight forward experience for me. Please post your comments with your experience here.


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