Interest taxation In most of the cases , Interest income taxation is accumulated for the taxpayer taxable income and taxed under regular negligible tax rates. Some bonds are exempt from tax according to section 103 of the American tax code. The best example is local authority and state bonds. For...
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The Streamlined Foreign Offshore Procedures Program The voluntary disclosure plan has been in existence since 2009. It allows tax evaders to volunteer information of their unreported taxes and foreign financial assets, for a decreased penalty. In 2012 fines were increased, but at the same time the program was expanded...
Foreign Earned Income Exclusion – Form 2555 As of 2016, section 911 of the IRC permits an exclusion of up to $101,300 of active foreign income. This holds true if the tax home is in a foreign country and the citizen passes one of the following tests: Physical Presence...
Other Credits & Deductions that allows on the Tax Returns Many of the credits and deductions for US citizens are not relevant to those residing outside the US, and are replaced by other credits. Every US citizen is entitled to a standard deduction, the rate of which is determined...
American Opportunity Tax Credit The Obama administrated initiated the American Opportunity Tax Credit plan, which grant students tax benefits during their first four years of their higher education, subject to several criteria: The student is a US citizen studying at one of the program’s eligible institutions; The student must...
The Child Tax Credit / Additional Child Tax Credit US citizens are entitled to tax credits of up to $1,000 for every child who is a US citizen and under 17 years of age at the end of the calendar year. A person must meet certain criteria and income tests in...
Capital Gain Taxation The sale of financial assets in the US (stocks, bonds, trust funds, ETF, REIT, etc.) is subject to capital gains tax rates. The US distinguishes between assets held for over one year and assets held for under one year. This distinction determines the taxation rates applicable...
Gifts and Inheritance Taxation in the US Unlike Israel, the US taxes gifts and inheritance, but exempts up to $5.45 million, as of 2016. This exemption is an “offset exemption”, deducted yearly from the sum value of gifts given to a person, exceeding $14,000. Taxation is imposed on the...
The Social Security Administration & Social Security Number The US and Israel share a tax treaty which prevents and regulates tax duplication. The tax treaty does not include payments due to social services and, as of today, no other treaty regulates this matter between the two countries. Thus, self-employed...
Form 1040 – U.S Individual Tax Return Unlike global taxation which relies on residency, the US tax system is contingent on the citizenship of the taxpayer. While Israeli tax regulations exempt many from reporting to the authorities, every person in the US who meets the criteria for calendar year...