Reporting to tax authorities in the US, voluntary disclosure in the US, and relocation issues
For many Israelis, exposure to tax issues in the US has occurred throughout their lives. Whether they hold US citizenship or Green Cards, whether they have relocated or returned from the United States due to the expiration of a visa, or even if they have simply conducted business within the world’s largest economic power.
The United States is at the forefront of global taxation and leads the fight against tax evasion and asset concealment. The power of the American tax authority is immense, and its influence is felt in almost every country worldwide. It is highly advisable to consult with accountants and lawyers specializing in the American tax system.
Our office has a department dedicated to US taxation, headed by an American CPA specializing in US tax law.
Reporting to the US Tax Authorities
Our office handles and deals with all types of reports and submissions in the US, including:
- Form 1040 and LLC filings
- Obtaining tax refunds in the US
- Establishing entities in the US, including LLCs, C-Corps, LLP partnerships, etc.
- Representation before US tax authorities
- Consultation and planning for relocation, including investment structure selection and tax planning in that context.
To read more about the American tax authority click here.
Intentional Disclosure in the United States
Intentional disclosure to the tax authorities in the United States (Streamlined Voluntary Disclosure) is a straightforward process that allows individuals holding US citizenship or Green Cards who do not reside in the US to retroactively settle their tax matters. Many citizens are unaware of their obligation to report their income and financial assets annually. The US tax authorities acknowledge that non-reporting is often unintentional. Therefore, they offer a streamlined disclosure process for individuals who have not fully reported or have not reported at all, allowing them to come forward without penalties or punishment.
The US voluntary disclosure process includes:
- Filing Form 1040 (US Income Tax Return) for the past three years.
- Submitting FBAR reports (Foreign Bank and Financial Accounts) for the past six years.
Our office’s US tax department handles voluntary disclosure in the United States for income from Israel and worldwide sources that have not been reported to the US. There is no need to obtain an ITIN (Individual Taxpayer Identification Number) in the streamlined process, as the individual can use their US Social Security Number for reporting purposes.
Consultation and planning for relocation
Relocation to another country permanently or for an extended period is becoming increasingly common among Israelis seeking professional development, new and diverse employment opportunities, or who are on diplomatic missions.
When an Israeli citizen relocates, even if they have copied their place of residence, they will continue to pay taxes in Israel until they have completed the residency termination process with the tax authorities. In this process, the individual’s “center of life” will be examined. It is important to remember that residency termination not only affects income tax but also national insurance and health insurance contributions. Taxation is a critical issue in the relocation process and has a significant impact on the individual and their family.
Sometimes, relocation planning requires collaboration between professionals in both countries. Our office provides legal assistance both in American and Israeli law.
