Sunday, May 01, 2005

US Tax Day is good for the American Jews of Israel

April 15th passed not so long ago and while those of you living in the US dreaded that day when you have to pay your taxes, here in Israel, many American citizens are happy when tax day comes around. Those of us who work in Israel get money back from the US Government. A number of years ago, the US introduced a refundable child tax credit which started at $600 a child and is now $1000 a child. American citizens who live, work, and pay taxes in Israel, report their Israeli income to the IRS, but, because taxes are higher in Israel then in the US the taxes paid in Israel more then offset any tax that would be owed to the US government (by treaty there is no double taxation). Therefore, they end up owing no taxes to the US government and because the tax paid in Israel more then offsets the tax that would have been due in the US, they end up receiving a refund of almost $1000 a child. This has become widespread in Israel and I would guess that many/most Americans living in Israel are doing this. Note, this is perfectly legal and legitimate, there is absolutely nothing wrong with this, it is just a unintended consequence of the changes in the US tax system.

The truth is the money is going to a good cause, the readers who live in the US are helping support ישוב ארץ ישראל.


Anonymous said...

Would the Chofetz Chaim have done this?

bluke said...

I don't see why not. This is perfectly legitimate. As a US citizen I am obligated by law to file a US tax return by law. I used Turbo Tax and filled out the return and according to the tax law the government owes me a few thousand dollars. I really did make the money and pay taxes in Israel.

Anonymous said...

I am the one who asked the question. I apologize and ask your forgiveness.