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U.S.-Israel Dual Taxation: Treaty Benefits, Taxation of Real Estate Transactions, Pensions and Social Security

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, November 30, 2021

Recorded event now available

This course will explain tax planning opportunities, and pitfalls to avoid for both U.S. immigrants to Israel and Israelis residing in the U.S. Our panel of international tax experts will discuss tax compliance and reporting responsibilities, review taxation of real estate transactions, and analyze the U.S. Israel Income Tax Treaty for benefits available to taxpayers in both countries.

Description

Whether an accidental American or intentionally immigrating to Israel, taxpayers subject to tax in Israel and the United States need to understand how to avoid or mitigate double taxation of income in these countries. The U.S.-Israel Income Tax Treaty is one of the 68 treaties accessible on the IRS website. Like most of these treaties, the U.S. Israel Income Tax Treaty provides reduced withholding rates, explains which country gets the "first bite" of taxes, and details the taxation of various revenue streams to prevent double taxation of income.

Unlike most of these countries, there is no totalization agreement between Israel and the U.S. A totalization agreement exempts self-employed individuals working outside the U.S. from Social Security tax. If you are a U.S. citizen who is self-employed in Israel, you will likely pay both the Bitauch Leumi (Israel's National Insurance) and U.S. self-employment tax.

On a positive note, certain U.S. immigrants' pension income is tax-exempt in Israel for 10 years. Even after the initial 10 years, these pensions are taxed by Israel at no more than the U.S. tax rate. This and other U.S.-Israel benefits are available for taxpayers subject to taxation in both countries. Taxpayers subject to tax in both countries, planning extended stays in Israel and the United States, and their tax advisers, need to thoroughly understand the tax consequences and remedies available to mitigate dual taxation.

Listen as our U.S. and Israel tax expert panel explains the taxation of different income streams, allowable tax deductions, and treaty benefits available to lessen the tax burden for taxpayers liable for tax in both countries.

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Outline

  1. U.S.-Israel Dual Taxation: introduction
  2. The U.S.-Israel Income Tax Treaty
  3. Israel's 10-year tax holiday for immigrants
  4. Differences in taxation of common streams of income
  5. Allowable tax deductions
  6. Available tax credits
  7. Planning for charitable donations
  8. Tax treatment of LLCs, partnerships, and pass-through entities
  9. Taxation of real estate transactions
  10. U.S. and Israel compliance requirements
  11. Common pitfalls in tax planning and reporting

Benefits

The panel will review these and other critical issues:

  • Determining whether the U.S. or Israel gets the "first bite" of taxes
  • Taxation of U.S. pensions and Social Security by Israel
  • Deductibility of real estate taxes, contributions, and other deductions in the U.S. and Israel
  • Capital gains, Section 1031, and installment sale considerations in the U.S. and Israel
  • Analyzing the U.S.-Israel Income Tax Treaty for benefits

Faculty

Broide, Gidon
Gidon Broide, CPA (Israel & US), TEP
Managing Partner
Broide and Co.

Mr. Broide provides accounting and tax services to Israeli and foreign clients. He and the firm are specialists in the...  |  Read More

Katz, Harold
Harold D. Katz, CPA, TEP
Member
Katz

Mr. Katz is the managing member of Katz LLC, a full-service CPA firm in Chicago IL, with an extensive practice in...  |  Read More