Reporting taxes in the U.S. with an American CPA by your side
Many citizens living in Israel are required to file income tax reports in the U.S (U.S TAX). Failure to comply with this requirement constitutes a violation of the law. If you are also required to report taxes in the U.S, it will be difficult to do so without an American certified public accountant who is familiar with all the laws. At Shtainmetz Aminoach and Co., we have established a special department to provide professional service and guidance from experienced American accountants in Israel, who possess extensive knowledge.
Who is required to report income tax in the U.S.?
If you meet any of the following criteria, the IRS is waiting for your annual report:
- U.S. citizens or Green Card holders, even if they do not reside in the U.S. or are not subject to U.S. taxation. This includes anyone holding American citizenship, even if they have never visited the U.S.
- Anyone conducting business activities in the U.S., even if they are not U.S. citizens or Green Card holders. This includes Israeli citizens working in the U.S. (even under an Israeli employer's contract), Israeli citizens investing in real estate in the U.S. (for information on taxation of real estate in the U.S.), or anyone engaging in any business activity, such as establishing a company in the U.S.
Note: Anyone who has an accumulated amount of more than $10,000 in their financial accounts outside the U.S. at any time during the year is also required to file the FBAR Report of Foreign Bank and Financial Accounts - a report on foreign financial accounts (outside the U.S.). This American tax report is filed separately from the annual tax report by April 15 of the following year. An extension for filing the report can be obtained until October 15. Failure to file the report may result in heavy fines and unnecessary exposure to U.S. tax authorities.
When are income and taxes reported in the U.S.?
Reporting taxes to the U.S. citizens is typically done by filing an annual tax return with the federal tax authorities in the U.S. However, you should check the specifics as in certain cases you may also need to file a report with the state authorities in addition.
Reporting deadlines vary depending on the reporting entity.
Individuals residing in the U.S. report their income by April 15 of the following year, with an extension available until October 15. Non-residents of the U.S. must file by June 15, with an extension available until October 15, and an additional extension if needed until December 15 of the following year.
How severe is tax authority enforcement?
Let's start from the end: Don't get tangled up with the U.S. tax authorities. Taxation in the United States is a very important matter. Enforcement of reporting obligations is rigorous and strict, backed by laws requiring Israeli banks to report clients identified as U.S. citizens or engaging in any business activity in the U.S. For example, an Israeli holding American citizenship is required to file tax reports with U.S. authorities and report their foreign bank accounts, even if they have never visited the U.S. and are not liable for U.S. taxes. Due to strict enforcement, it's advisable to use the services of an American tax consultant to ensure that nothing is overlooked.
What sanctions can you expect if you fail to report American taxes?
According to U.S. laws, failure to report taxes is actually a criminal offense and can lead to severe penalties. The penalties imposed are serious and may include high tax payments, fines, administrative penalties, and in certain cases, even prosecution! Our advice is not to take the risk: simply verify your reporting obligations, ensure to file a tax report in the U.S., and comply with the law.
Reporting U.S. income tax for benefits
Many prefer to report to the American tax authorities in order to benefit from tax refunds in the U.S., which can be obtained for children, academic studies, and more. If you have American citizenship, it is advisable to find out what benefits you can receive by filing tax reports.
Report easily to the American IRS
Taxes in the U.S. (US TAX) can be a very complex process, difficult to navigate without an American CPA. Need help? Unsure if reporting obligations apply to you? Need to report income tax in the U.S. but not sure how? Contact Shtainmetz Aminoach & Co. accounting firm, and our team of experts in American taxation will be happy to assist you.