Tax Advantages in ISRAEL
The tax table refers to 2012 tax year:
| Income type | Tax rate in Israel | Tax rate in the US | Double taxation
on income from ISRAEL |
appendix |
|---|---|---|---|---|
| Rental Income |  First option – up to 4910 NIS tax free
|
Taxed as Ordinary income after deduction of expenses. |
There is a realistic probability on owing tax to the IRS since the first two options in ISRAEL present an extremely low tax rate if one even exist. | Rental Income tax rate in the US |
| Estate tax | 0% | Up to 35% on the excess of $5,250,000 | Up to 5,120,000$ the Unified credit can be used to offsetany tax liability. | Estate tax rate in the US |
| Gift tax | 0% | Up to 35% | Up to 5,120,000$ the Unified credit can be used to offset any tax liability. | Gift tax rate in the US |
| Pension/provident fund/Manager’s insurance | Usually progressive tax rate 10%-48%.
|
Taxed as ordinary income 10%-35% | The Israel-USA tax treaty doesn’t recognize payments allocate by the Israeli employer as part of your cost basis meaning those payments will be treated as part of your income.
Only if the tax paid in ISRAEL was higher than the one calculated on your return no tax liability will take place |
Tax rate in the US |
| Advanced study fund | Tax exempt if the fund was held for 6 years | Taxed at capital gain tax rate | The Israel-USA tax treaty doesn’t recognize payments allocate by the Israeli employer as part of your cost basis meaning those payments will be treated as part of your gain.
Very high probability for double taxation on that income. early tax planning can reduce substantially any tax liability |
tax rate in the US |
| Mutual funds | EXEMPT MUTUAL FUND: tax rate is determined based on type of investment the mutual fund makes
The actual tax rate is determined by multiple factors |
Usually taxed based on either long or short capital gain | Foreign mutual funds don’t meet the IRS definition of such .they fall into the category of Passive foreign investment company therefore the IRS requires from investors on these funds special report using form 8621 and to the owners themselves additional report using form 3520-A | Tax in the US |
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