Wednesday, July 30, 2008
Taxes
Here is an article that I found interesting. I know of a few people that have made Aliya with no intent of coming back and yet they pay their American taxes. I always thought it was interesting, now I see there is logic to this action.
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Unless I'm wrong and the people you know are really rich, I don't think that people continue to be US Citizens because of the information in the linked article. For most olim, the story is quite the opposite. The US will actually pay olim with kids who file their taxes because they will be eligible for child tax credit. And since US and Israel have a tax treaty, once you're taxed in Israel (at a higher rate than US), US won't tax you. At the same time, you will still get the child credit from the US.
so that is like, cheating the government out of money.
No taxes to support unconstitutional wars in Iran. America First!
I'm not sure you realize this but this post was about Israel.
No, this is not cheating it out of money. This is called using the system to your advantage. Let's say that 2 US Citizens with 3 kids (who are also US Citizens) move to Toronto. Let's say they earn only $20k per year.
IRS requires that all US Citizens file US Tax forms. This is mandatory if one earns more than $8k per year, I believe.
These 2 people pay Canadian taxes. Since taxes in Canada are higher than the US, these people don't owe anything to the US because of the tax treaty between US and Canada. However, they are eligible for child tax credit, which is $1000 per child. Thus, the family will receive $3000 for their 3 kids, without ever paying taxes to the US. This is how the US Tax System works. Whether you're taking advantage of it is in the eye of the beholder. Remember that it's illegal not to file income taxes for the US as long as you earn more than a small amount and as long as you are a US citizen.
Also, imagine a US Citizen moves to a country with very little taxes (less than US). That person would have to pay the tax difference to the US. I know it's rare, but it does happen.
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