Some Common Mistakes Israelis Make With International Responsibilities

First of all, Israelis who are American citizens or residents must report all their income to America, even if they don’t live there. Some Israelis forget this and do not file an American tax return while they live and work here in Eretz Yisrael. A good example is the American citizen living and working in Eretz Yisrael as an employee. He has to report to America even if he doesn’t visit there, work there, or earn any money there. Forgetting your American tax responsibilities can be tragic because after many years the American government can come back and collect taxes that should have been paid. Some people think of expatriating from America to avoid this problem. By denouncing their American citizenship or removing their permanent resident status, some may reduce their American reporting requirement but that is a drastic measure. Having an American citizenship can be helpful and keeping good, positive relations is nice.

American tax reporting & compliance is not a problem, because with a competent accountant here at Weinstein, most often those Israelis who were reluctant to report to America in those instances because of fear of big tax bills do not end up owing any tax. Paying a small fee to an Israeli accountant is much better than being audited or having an IRS inquiry. The American tax system is based on voluntary compliance. That means the IRS gives people the benefit of the doubt. Like the Mitzvah of the Torah that, “One should just his fellow fairly,” also the IRS judges people innocent first until they have reason to believe otherwise. The real risk tax avoidance. When people say, “I don’t want to deal with it. Other countries will not find out what I am doing here,” that is tax avoidance. Fees & penalties for avoiding responsibilities can involve levies and seizures of financial and physical assets like homes, boats, and cars. Tax avoidance is the number one mistake many Israelis who have American tax responsibilities make. Not knowing is not an excuse. A well advised client is happy and contented, knowing your tax responsibilities are taken care of. You can sleep very well at night, go on vacation, buy things and never worry. Voluntary compliance means you come running to have Weinstein look at your American tax responsibilities to make sure you are in compliance. We can advise you initially for no charge at all.

A second mistake some Israelis make that causes us problems is for those of us who are self-employed and live here in Eretz Yisrael. Self-employed business owners here in Eretz Yisrael who are also citizens of America accrue this self-employment tax that must be paid to America, even if they never visit there, never earn money there, and have no assets there. This can have drastic consequences if avoided. Israelis who are American citizens who never visit there or work there sometimes do not file American tax returns. This is not smart, because America finds out about income without needing to hear it from the employee. Some taxes have to be paid quarterly. American self-employment income taxes can be brought low by a skilled accountant here at Weinstein, because when you have your Israeli taxes done in the same place as your American tax responsibilities you have the advantage that one talks to the other. One can deduct where the other pays. Therefore, if you are an American citizen or lawful permanent resident who has been working here in Eretz Yisrael as a self-employed Atzmei you should consider:

– Opening an Israeli corporation with Weinstein and letting us help your Israeli corporation grow. When your Israeli earnings are run through an Israeli corporation, your earnings will not be taxed the same way for your responsibilities to America. It will become easier for you to be America-compliant. You will not have to make quarterly payments for example. Your peace of mind will grow knowing you are keeping and growing your business here in Eretz Yisrael, while staying true-honoring your American tax responsibilities with good, proper, prudent money management and proficient financial skill.

– Having Weinstein do your Israeli bookkeeping for your Atzmei. With us doing your bookkeeping here in Eretz Yisrael, our American tax team can advise you more easily. American self-employment taxes can be deducted from your Israeli income tax that you pay here. By complying with American self-employment quarterly withholding and payment of estimated income tax, your Israeli income tax will go down. You can deduct your American self-employment tax on your Israeli income tax return to the extent those Israeli income taxes are paid on those very same earnings. When at first you thought you had a hassle complying with American tax law, your tax load will go down and your peace of mind will go up. Our understanding of the Treaty will help you go forward without trouble and push through any obstacles you have to making your wealth secure into the future. You are in good hands by choosing Weinstein & Co., Certified Public Accountants to share your American tax responsibilities and advise you.

Also, anyone with an American tax responsibility needs to have a TIN, or tax identification number. Weinstein is now beginning to help clients who need TIN numbers avoid sending in their passports to America. You can just bring your documents here and we will look at them. Chances are, we can certify your documents right here and request your TIN number from America without you having to leave our office. How convenient!

You are in good hands for having us work on your behalf.