- Pre-relocation tax planning and strategy
U.S.–Israel Tax Treaty analysis - Cross-border tax filing coordination and double taxation prevention
- First-year residency and severance planning (including nituk toshavut)
- Compensation and state tax planning in the U.S.
Israeli pensions, investments, and PFIC planning
At Philip Stein & Associates, we promise to provide clarity and comprehensive assistance throughout your relocation journey. Our team of experts will help you navigate the intricacies of the U.S.-Israel Tax Treaty, ensuring you understand the relocation tax benefits and implications.
We will work closely with you to plan your move for the most advantageous outcome, offering guidance and support every step of the way. With our help, you can confidently embark on your new adventure, knowing that your financial and tax matters are in capable hands.
TAX PLANNING WHEN RELOCATING TO THE U.S.
When relocating to the U.S., one of the most critical aspects to understand is your take-home salary. Attractive salary offers often mask the reality of federal, state, and local taxes significantly reducing your net income. Bonuses, living arrangements covered by your employer, and other fringe benefits are taxable income in the U.S., further impacting your take-home pay. Additionally, different states have varying tax rates and regulations, which can significantly affect your net income.
Properly planning how to file your taxes in the first year after moving from Israel to the U.S. is essential. Aligning your U.S. and Israeli tax filings, primarily if you perform a “nituk toshavut” (severing residency), is vital to avoid double taxation or other legal issues.
Learn our top 10 tax tips before making your move!
RELOCATION TAX PLANNING WHEN MOVING FROM ISRAEL TO THE U.S.
Understanding your time horizon—or how long you plan to stay in the U.S.—is essential for effective relocation tax planning. You can always adjust it during your stay, but start with a plan in mind. This will help you know what steps to take before your flight.
When moving from Israel to the U.S., it’s important to understand how your old Israeli pensions and keren hishtalmut will be taxed. Distributions from these accounts may be subject to federal and state taxes in the U.S., making proper planning essential to avoid unexpected tax bills. Also, managing your investments through Israeli bank accounts and kupot gemel is critical, as these may be considered Passive Foreign Investment Companies(PFICs), leading to negative tax implications.
A thorough understanding of the U.S.-Israel Tax Treaty is vital for anyone relocating to the U.S. This treaty helps prevent double taxation on income earned in both countries. However, effectively leveraging the U.S.-Israel tax treaty requires expert guidance to ensure you maximize the relocation tax benefits available to you.
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If you need comprehensive assistance with tax planning relocating to Israel or the USA before the move, please contact us today.