The benefits of consulting a double-citizenship C.P.A for Americans making an Aliya

Why should Americans consult with an Israelian-American tax expert accountant? There are so many cases in which that could be beneficial, yet in the upcoming article, we will discuss the ramifications of American and Israelian tax laws with regards to the American that decides to make an Aliyah. 

The miracles of taxations solutions 

Americans that decide to make an Aliyah and still keep their American citizenship should know that they may be liable for double taxation. The reason is, that even though Israel and the U.S.A have a tax treaty, which does not allow for double taxation, it indeed can provoke the highest tax bracket each country can invoke for each income category. 

Meaning, that if Israel requires a 10% income tax on such and such income bracket, and the U.S.A requires 12% income tax on the same income bracket, then a person will not pay both accounts. The tax will not get to 22% (10+12). Yet it might get to 12%, nonetheless. The reason is, that while an American making an Aliyah will not be required to pay double tax, the taxing procedure might require the person to first pay the resident country, suggesting, Israel, and then pay the second country later. meaning, the U.S.A. So, after paying 10% of said income in tax to Israel, the U.S.A might ask for the remaining 2% difference to its taxation procedures. 

The tax treaty challenges for Americans making an Aliyah

This implies that the main challenge for Americans making an Aliyah is to manage that kind of tax solution and make sure they are not paying the maximum amount of taxes, nor they are paying for questionable articles having to do with both country’s administrations’ taxes. Consulting with an American-Israeli C.P.A that is an expert on both Israel and U.S.A tax laws might produce beneficial results.

First of all, Americans that make an Aliyah are better positioned to understand all the laws, procedures, and norms that apply to their situation and how to rectify them if needed. So, if there is a need for a tax adjustment, or at least for an awareness of the payments required in that position – a consultation with an expert double-citizenship C.P.A might be highly beneficial.

Discover tax benefits and exemptions

Such consultation might reveal what there is to know about Israel and the U.S.A tax treaty and what is included and/or not included and how it relates to Americans making an Aliyah. The distinct advantage of consulting with an expert C.P.A that understands both Israel and U.S.A taxation laws is the opportunity to discover what the tax treaty has to say about the current tax situation of an American doing Aliyah. For example. Social Security is included in the treaty, yet the countries do not have a totalization agreement. This means there is no article for the exemption of self-employed individuals of a foreign country from paying U.S. social security tax. Americans making an Aliyah might be asked to pay both Bituah Leumi (which is the national insurance of Israel) and U.S. self-employment tax. Yet, if one has taken initiative and understood what the tax treaty has to say on the subject, it might be discovered that one is eligible to receive social security benefits. Those benefits might be exempt from both U.S. and Israeli taxes.

A consultation with an expert accountant might reveal if such eligibility exists and if so, how much tax exemption is to be expected, among other such and different tax benefits applicable to a current tax situation for an American making an Aliyah.