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

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.

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

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

Learning Objectives

After completing this course, you will be able to:

• Determine tax credits available to mitigate dual taxation
• Decide how Israel taxes LLCs and pass-through entities
• Ascertain when pension income could be tax-free in Israel
• Identify taxpayers subject to tax in the U.S. and Israel

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).