Understanding Tax Refunds in Israel: A Comprehensive Guide.
Are you a salaried employee or an investor in Israel wondering if you’re eligible for a tax refund? The Israeli Tax Authority estimate a total of 3.6 billion shekels in over tax is due for refunds. But tax refunds will only be paid if claimed. This article will walk you through the process of claiming a tax refund in Israel, highlighting the key conditions, benefits, and steps to follow.
Who is Eligible for a Tax Refund?
To be eligible for a tax refund in Israel, you must have paid income tax. The main condition is that you have paid more tax than you owe, and you’re looking to claim back the excess amount. This typically applies to:
- Salaried employees who have changed jobs during the year
- Individuals who have made charitable donations
- Investors who have incurred losses in the stock market
Common Scenarios for Tax Refunds
Here are some common scenarios where you may be eligible for a tax refund:
- Changing jobs: If you’ve changed jobs during the year, you may be eligible for a tax refund. This is because your employer may have deducted too much tax from your salary.
- Working for only part of the year: If you started or finished working in the middle the year, your employer ma have deducted too much tax.
- Charitable donations: If you’ve made charitable donations to recognized organizations, you may be eligible for a tax refund. The refund is calculated at 35% of the donation amount.
- Stock market losses: If you’ve incurred losses in the stock market, you may be eligible for a tax refund. You can claim a refund of up to 20% of the loss amount.
- Additional tax credits: You may be eligible for additional tax credits, such as Oleh Chadash or completing a degree – which can reduce your tax liability.
How Far Back Can You Claim a Tax Refund?
In Israel, you can claim a tax refund for up to 6 years back. However, it’s essential to note that the refund process can take around 90 days, and in some cases, it may take longer.
How to Claim a Tax Refund
- You can take all your documentation to the Tax Office where they can assist you with completing the forms to submit a tax reclaim.
- However, in most cases, you’re best off to use the services of an accountant. In addition to saving time and stress, the accountant will ensue that the maximum reclaim amount has been applied for. They can also follow the process to completion to ensure that the funds are paid into your account.
- In some cases, you’ll be offered the services of a ‘tax reclaim’ company. These service provides are not as skilled as accountants and are often more expensive too.
