Updates and Enddates

June 18, 2013

Shalom loyal fans!
I haven’t posted here in over two years! I apologize, but I think there evidently is enough information already on the blog to help 90% of the people and issues that they have.

But I have quite a few things to say, not necessarily in this order:

1. Doch Shnati Annual Tax Return deadline has been fluidly postponed again this year. It is the end of June, so you have some time yet.

2. I just called Mas Hachnassa, and they said I do not have to appear in person at their office to submit my printout of my doch. I can put both copies in the mail (my office is Jaffa Road 236, Jerusalem) and they will stamp my copy and mail it back to me. Kewel!

3. That printout is from the online doch shnati that everyone has to do nowadays. I never posted about it (tsk tsk). It really is quite easy. Some tips:
a. use Microsoft Internet Explorer (probably impossible otherwise).
b. Prepare the doch on paper first, so all you have to do is copy. Otherwise, you will spend too much time on line and perhaps lose your work.
c. Save frequently.
d. Other suggestions all apply as before, when completing the doch by hand old fashioned.

4. (Hidden sneakingly) I closed my tik! Because when doing my USA taxes for that $1000 a kid kickback, my accountant told me that an atzmai has to pay a $1000 fee to the IRS! So when you factor this in, the luxury of having an Israeli tik without having enough clients that require it can be very expensive.

I also got a j-o-b, so I am making money without needing a tik, so that pretty much clinched it.

If I will ever want to open a tik again, I can simply google “opening a tik” and find a dozen videos about the Simpsons (?) I mean, “opening a tik at mas hachnassa”, and find a whole bunch of information that some kinds soul wrote since February 2008…

5. Closing a tik, btw, is also easy and not scary.
a. Go to VAT offices on Kanfei Nesharim 66 (not 236 Jaffa). This is even if you are an osek patur, that is, had nothing to do with VAT de facto.
b. Tell them you want to close your tik. You will fill out a form and undergo a short meetign with a nice clerk. In fact, iirc, I filled out the form with the clerk’s help.
c. When you get your copy of what they give you, go downstairs to the modi’in, tell them you closed your tik in Ma’am and need to close it in Mas Hachnasa, they give you a form to fill out, you do that, submit it, and voila! You’re done. NOTE: I did this in Kanfei Nesharim even though I am really affiliated with Jaffa 236. I just wrote in big letters (as someone told me to) “Chuliyah 46” or whatever the number was, and they said it would get there in internal mail.

There you go, kind and faithful readers!
I hope this blog will continue to help people, and please continue to write if you have any questions. Even though I am no longer in the game, I still remember the rules, and as they say, “those who know, do, those who don’t so, teach.” Or something like that.

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a little more about osek patur plus sachir

March 6, 2011

a message to me, a reply in a comment somewhere on this blog, and a repost here in its own post..

Dear Chana Leah,

Thanks for writing, sorry for the time lag in responding, I guess you get what you pay for:-)

I have been reading your blog on-and-off for a while. I just opened an osek patur, but I am still working in a regular “sachir” job part-time. I wanted to ask you the following: Will this affect the taxes that I will pay at my sachir job or as an osek patur?

>>I remind you, my “advice” is not professional, just my educated guess. Depending on your salaried income, it probably will not impact. I don’t have the exact numbers, but from what I understand, if your combined income is under a certain number, you do not pay more. See below>>

If so, do I need to visit Te’um mas or any other office to fix this?

>>The question isn’t how much tax you will pay, but how much people will withhold from you. Ultimately, around Pesach you will go to the free advice hours, and they will help you complete your tax return (doch shnati) and tell you how little if any tax you will have to pay. But until then, you should go the Mas Hachnasa and get a teum mas, so your salaried job won’t deduct more than he should, and your clients won’t think they have to withhold at source (nikkui mas bamakor). Getting a teum mas is painless, just takes time. I understand that you can do it online nowadays. Taxes.mof.gov.il or something like that.

Thanks for your help, Chana Leah

Thanks, Gidon Ariel


Tium Mas, Osek Zair, Unemployment benefits

July 10, 2010
Here’s a question someone sent me, instead of asking him to post it here and only then responding to it on this blog, I an cutting the bureaucracy and posting it directly. Your comments appreciated:-)
—–Original Message—–
Sent: Thursday, July 08, 2010 11:42 PM
Subject: tax status query
shalom,
i came across your very interesting and helpful website through a google search.
>>thank you shucks:-)
i was hoping that you may be able to answer a question that i have. once in a while, i do freelance work as a translator and recently i was asked to do some for someone working at an institution that requires me to provide a to’em mas.
>>that would be a ti-um mas
the issue is that i am officially listed with bitu’ah le’umi as ‘unemployed’ because i do not work and i have no income. (i likewise receive a significant discount on arnona, as a result.)
since this is a short-term engagement and i do not expect to receive much money (at most maybe NIS 10 000, probably much less)
>>this is NOT a small amount of money! If you would have said 100 NIS or even 500 NIS, then maybe…
, (1) how do i provide a to’em mas? (is it by following the steps mentioned above, namely, becoming an oved za’ir?)
>>If you are currently listed as a lo-oved, collecting bituach leumi unemployment benefits, then as far as I know, you cannot work for money at all to make it worth your while. I thought otherwise myself once, even asked the clerk at the bituach leumi desk, probably misunderstood her, and ended up eating the rotten fish, getting smacked, and being exiled from the city.
if so, (2) how does this affect my status as ‘unemployed’, since i will essentially still be unemployed after this is finished?
>>I would suggest that if you want to continue collecting unemployment benefits (which as far as I remember last no longer than six months anyway) then do so.
But if you can hustle up some 10K jobs, even 300 NIS jobs, open up a tik and get to work! See other posts on this blog for how-to’s.
Again, others might encourage you otherwise, but I would strongly not try to dance at two weddings here.
all of this is very new to me, so i would appreciate greatly any thoughts you may have.
thanks so much,
david

Comprehensive guide to opening a business in Israel

June 30, 2010

I am so glad that I did not write this post such a bombastic title, I am not deserving!

As many of you know, Rachel Berger is a senior executive (to use Old Countryspeak) at Nefesh Benefesh, and if I haven’t plugged that organization until now on my blog, my bad, here it is.

Anyway, somehow I came across this guide, and then found it was barely findable, so I am assuming Rachel won’t mind my posting it here. As a non-professional, I do not attest to the correctness of her writing, nor of mine, blah blah blah. YMMV.

********************************************

Date: Aug 21 2009 – 5:46pm

Establishing a Business

Step 1: Opening a File for VAT
To open a Tik (file) for Ma’am (VAT), you will need to go to the local tax office. To find the local tax office, check online or in a phone directory under “Mas Hachnasa” (income tax). You will need to bring your Teudat Zehut (ID card) with you and fill out forms with the required information. The type of Tik that you open depends on how much you plan to make a year, i.e., the scope of your business.

If you expect to make under 70,000 NIS: Open a Tik for an Osek Patur, which means that you are exempt from Ma’am and – basically – do not need to interface with the income tax offices, which is very convenient. You will need to buy a Pinkas Kabalot (receipt book) so that you can issue receipts for your clients. A Pinkas Kabalot can be found in any office store. can will use the receipts from this Pinkas for bookkeeping purposes.

If you expect to earn over 70,000 NIS: Open a Tik for an Osek Morshe. You will receive an official Ma’am book. Clients will be charged Ma’am and you will basically be required to forward the Ma’am that they pay to the Ma’am office. When you sign up, make sure to ask the exact details of where and how you make the payment.

Step 2: Mas Hachnasa (Income Tax Authorities)
To open a file as an Oved Atzmai (freelancer) , you need to take the Osek Patur or Osek Morshe certificate to the Mas Hachnasa (income tax) office. Find the department in Mas Hachnasa that handles freelancer, and fill out the necessary paperwork. Once you’ve completed the registration, you will be required to submit a tax form once a year, which you will be receiving in the mail from the tax office.

Buy an accountant book – Sefer Tikbulim V’Tashlumim – at any office store, and use it to keep track of your payments and expenses. If you are careful about recording your transactions, it will make it easier to fill out the annual tax form.

Save all of your receipts and relevant paperwork, for a period of seven years. While noone wants to be audited, it does happen, and the only way to protect oneself is by saving all of the necessary documents.

An Atzmai who works from home can deduct some expenses from home bills such as electricity, internet, phone costs, Arnona (property tax), etc. The percentage of the deduction is based on the area used for the business. For example, if a house has four room and one of the rooms is used for business, the deduction that is recognized would be a quarter of the total cost. For more information about what can be deducted, speak to a qualified accountant.

Step 3: Bituach Leumi
When you open a file at Mas Hachnasa, a file is automatically opened for you at Bituach Leumi (National Insurance Institute).

The Bituach Leumi office will send you a form requesting your employment details, including any pay stubs that you have, and an Ishur (statement) from the bank providing that you are the owner of your bank account.

Once you submit this form, Bituach Leumi deducts 9% to 16% of your income as either Bituach Leumi or Mas Briut, depending on how much money you earn. The exact amount that will be deducted is listed on the Bituach Leumi website (HYPERLINK “http://www.btl.gov.il/”www.btl.gov. il).

Step 4: Declaration of Capital
Approximately every four years, you will be asked to submit a declaration which indicates your net worth, including your earnings and any properties that you own. It is recommended that an accountant with expertise in Hats’harat Hon prepare this form on your behalf.

Rachel Berger
Senior Career and Business Developer
NefeshB’Nefesh


More about the big decision – zair, murshe, or what?

February 23, 2010

Some one else posed this question and I am posting it here, with my answers interspersed. Hope it hopes him and you!

Dear Gidon:

I have been reading your blog about succeeding as an “Atzma’i” for advice about my situation. I am a 24 year old recent oleh from Boca Raton, FL now living in Jerusalem.

>>Welcome! my sister is from Boca, we should compare notes..

I am in the midst of my enlistment process for the IDF, having already hope to be drafted in the summer.

>>Behatzlacha rabba on that too!

In the meantime, I’ve been hired as an outside contracted translator for a consulting firm based in Tel Aviv, on a part-time basis. My employer says that her company can only pay me if I open an “Osek Za’ir” file, because I am not a company employee and they do not want me to be entitled for full employee benefits.

>>They are thinking inside the box that they know.  The know that they do not want to hire you, for the reason you mention and maybe others. They know that they have to work within the framework of the law, so they cannot pay you “under the table.” They realize that they will not be paying you so much that it would make it worth your while to open up a tik as osek mursheh, and they are familiar with the less known possibility of Osek Zair, which seems to fit your situation, so that is what they are  recommending/requiring of you.

Researching your site and speaking to other people, it seems she meant an “Osek Patur”.

>>Same thing

I intend to work at this position until my army draft, no more than 4 or 5 months. Moreover, the total salary I earn won’t amount to more than 20,000 shekels.

>>If this (or even as much as about 60K NIS) is all that you will make during calendar year 2010 in receiptable work (not as an employee, or as a soldier I would venture to guess – any position with a tlush maskoret) then they are right – you can be an osek zair, and probably should be.

I’ve spoken to some employment specialists from Nefesh B’Nefesh, and a few Jerusalem-based accountants about my status and which option of registering as an independent seeks me best. The consensus among them seems to be that I should open an Osek Patur of the “third category”- as an atzma’i- with a Koach Adam company.

>>I am not sure what you mean here. When you go to open as an Osek Patur (in the VAT office), you actually first open as an Atzmai in the Mas Hachnasa office. There, at Mas Hachnasa, they ask you what you want to do as your business, but I don’t remember categories, you just tell them Translation Services or Translating and Business related services or whatever, they don’t really care too much about small businesses that barely bring them tax income at all  .. I for SURE don’t understand this Koach Adam part..

(One account told me to look up a Jerusalem-based company called Oleh Sapir in the white pages, which I couldn’t find) According to them, I open a file with this company, and my employer sends my paychecks to this firm, who takes a small commission to handle my case.

>>Ahh. “Oleh Sapir” is probably Yeul Sachir, a company that I am quite familiar with, and owe my loyal readers a deeper post about.  I can see how someone might call this a Koach Adam company, but it works quite differently from standard koach adam companies, like Manpower.

With Manpower, they collect potential workers for positions that they specialize in, then companies who want to hire someone to do that job but want to save themselves some headaches (interviewing, training, benefits, etc etc) and frequently for a short term contract, go to Manpower and get someone.

With Yeul Sachir, the service professionals do the services they specialize in, but they also do the marketing of their services, and have a personal relationship with the companies/people they do business with. Yeul Sachir does the finance work, bills your client and collects (with help from you) and pays you with a tlush, as you are legally their employee. They take a cut of 7% up to 400 NIS a month for their services.
They maintain that the advantages of this option include: easy opening and closing my file as an Osek Patur,

>>Actually, establishing a repationship with Yeul Sachir obviates the need to open or close an Osek Patur file at all.

no taxation on American assets,

>>I am not sure of this one

and no hassle opening my own Osek Patur at varius bureaucratic agencies while I am being interviewed by the army agencies to secure my placement.

as above, no need to interface at all with Mas Hachnasa or VAT

I am still confused about how to proceed, as I am in the dark with the Israeli tax system and bureaucratic institutions. I would greatly appreciate any advice you can give me about how to go about this.

>>Notwithstanding the extensive descriton I gave above of Yeul Sachir, since it looks like you are only going to bill about 20K NIS this calendar year, and since I assume your client will be a business, which means they do not care whether they “pay” their service providers VAT or not (because the deduct it), Rodan Gordon (principal at Yeul Sachir) would probably encourage you to open a tik as an Osek Zair.

Try calling him at 02-6510666, tell him Gidon sent you.

Good luck!

PurIm Same’ah!


Osek Mursheh, Zair, or Teum Mas?

January 16, 2010

Jessi wrote in a comment to a previous post. I will use this post to respond:

Hi Gideon!

My name is Jessi and I have come across your website before but today when searching for information on specific atzma’i status, I noticed with pleasant surprise that you have me in your blog roll :) I know I have been in contact before with Jeremy over at Shomer Shkalim, but had no idea that you would also include me! So thanks….I do need to really get on top of publishing more. Really – I’ve been beyond horrible at posting.

Anyways – I have a question that you may or may not be able to answer for me:

I myself also am a freelancer, however as far as I know, I’m not any one status or the other. I have always just been referred to as an atzmait. I have a “file” open up at the tax office but whenever I gained a new client, I would get their business number and would be issued a teum mas. This has always been sufficient for what I have done.

However, I have a new company that wants to hire me on and they asked me to have an osek mershuh status – which from what you have found out and from what I have been told, I need to earn at least 64,000nis/year in order to qualify for this status and while it would be nice to do so, that is nowhere near what I will be making with this company – in fact, in a year, I would only project to make about 18,000nis.

So my problem lies here – this new company would like me to issue receipts to them (which is understandable) – I normally if a client asks, just write one off Excel or some other billing software I’m using at the time and then send it in and keep copies for my records. However, now I’m worried – do I actually need an official receipt book with my tax status on it? Or can I just purchase one from Office Depot and be done with it?

Also, this project is only about 5 months in scope, so I don’t know if since I will be under the “radar” as people have been calling it, is it really worth it to go through the whole process of opening a new file?

Thanks!

Oh and I shall also be adding you to my blog roll in reciprocation.

Gidon responds:

if your potential client wants you to work, then they (or specifically, their accounting dept) will get over the fact that you are an osek zair and not mursheh, meaning that they do not pay you ma’am
I’m not any one status or the other. I have always just been referred to as an atzmait. I have a “file” open up at the tax office
The MAAM tax office gives you a certificate (see mine:-): https://atzmai.files.wordpress.com/2010/01/gidon-ariel-osek-patur.gif ) that says in capital letters if you are a mursheh or a zair. If you have neither, you are neither! So if your direct charging work this year (not counting the clients who take you on payroll and do a teum mas) comes out to less than about 60,000 NIS this year, then you can open an Osek Zair account.
You might consider working through Yeul Sachir or similar for this project, but I doubt it will be more beneficial for you than if you open an osek zair tik as above.
So my problem lies here – this new company would like me to issue receipts to them (which is understandable) – I normally if a client asks, just write one off Excel or some other billing software I’m using at the time and then send it in and keep copies for my records. However, now I’m worried – do I actually need an official receipt book with my tax status on it? Or can I just purchase one from Office Depot and be done with it?
As I wrote elsewhere in this blog (insert link here, lazybones), it seems the simplest solution for us oskim ze’eerim is to buy the humungous Hadar “pinkas kabalot leosek zair” which has about 400 receipts for about 63 NIS and simply write the following six items on each one, by hand, at the time of its issue:
your name/name of your business
your phone number
your teudat zehut number (the number of your business license)
date of issue
the name of your client
the scope of the work you are providing this receipt for
total charged
your signature
Also, this project is only about 5 months in scope, so I don’t know if since I will be under the “radar” as people have been calling it, is it really worth it to go through the whole process of opening a new file?
If your client requires a receipt, then your choice is either open a tik or work through Yeul Sachir or similar.
Good luck!

How much money should you try to make?

October 15, 2009
Obviously, the answer is as much as you can.
But I have recently noticed that there are a few bureaucratic bodies who care how much I make, and charge me. And some of them charge me more if I make more than a certain amount (in some cases, they charge me nothing if I stay clear of that minimum), and some charge me more (relatively) if I make less than a certain amount.
To clarify:
VAT only “charges” me if I make more than about 60,000 NIS a year. (Yes, I realize it’s more complex than that, they don’t really charge me etc, but for the sake of my own radar, let’s keep it at that.)
Bituach Leumi charges me a minimum of about 80 or 110 NIS a month (I can’t remember and can’t be bothered to go find the paper that hinted at this number). This is even if I make 80 NIS a month, or less – even someone who is unemployed is required to pay National Insurance premiums monthly. And once you make more than 17,443 NIS a year, your premiums go up (not sure how much, but it starts at about 6% I think (that’s about 1000 [the premium you pay annually for up to the minimum income rate) divided by 17443 (the minimum income you start paying more than the minimum premium on).
Here are the other offices that care about my income as an atzmai (and even as an employee, for the most part):
The IRS: Evidently, if you are a US citizen, you are required to complete an annual tax return. In principle, you will owe no income tax if you make less than some amount (depending on number of dependents etc.) For me, this number seems to be a walloping $70,000 or $90,000, whatever, they are both pie in the sky right now. BUT, you are entitled to up to $1000 per child rebate (I use the good help of Jeff Melamed for this http://groups.yahoo.com/group/ustaxreturnREFUNDS/). That “Up To” depends on your income. When you start making less than a certain amount, then your rebate per child is less. This depends on the number of kids you have etc. etc., my “aim for” amount to get the the maximum is about $46,000 a year household income.
FBAR: This requirement is not a tax, it is simply a reporting requirement. If you have a cumulative balance of more than $10,000 in all of your overseas (i.e., not USA) accounts, including banks, keren hishtalmut, and dunno what else, you have to report all of these accounts. You get to the cumulative balance by finding the highest recorded balance of each account for the year (say, Feb 15 for one bank, Dec 31 for the just-put-in account) and adding them up. This thingie got a lot of press this year, because it is the first time they are clamping down on enforcement, with draconian penalties threatened. (If you are interested, I checked my balances for every year since 2003, the year they are checking on since nowadays, and I was only on their radar for 2 of those years). (This link is a good start if you haven’t heard about this until now: http://muqata.blogspot.com/2009/06/us-citizens-in-israel-have-you-filed.html)
Doch Shnati: As I have blogged here before (most of this blog is about this), if you keep pretty good records of your income and your spouse’s income, then go ask for help towards the deadline during Mas hachnasa’s free advice hours, you should be OK. BTW, for me, I think I would have had to staert paying Israeli Income Tax at household income of no less that 200,000 NIS a year.
So, if you have the same factors as me, then here are the annual numbers that raise a flag:
17,443 NIS – what to aim for if you want to pay the lowest amount percentage and cash-wise for Bituach Leumi.
60,000 NIS – when an Atzmai moves from being an Osek Patur to an Osek Mursheh.
$10,000 – FBAR reporting requirement
$46,000 – household minimum to get the maximum Child Tax Credit refunds
200,000 NIS – start paying Israel Income Tax (Mas Hachnasa)
$70,000 – start paying US Income Tax
DISCLAIMER: I wrote most of the above from my own limited knowledge, with barely even using Google. I hope I haven’t made any glaring mistakes, and I will appreciate any corrections and additions.
Comment away!

Obviously, the answer is as much as you can.

But I have recently noticed that there are a few bureaucratic bodies who care how much I make, and charge me. And some of them charge me more if I make more than a certain amount (in some cases, they charge me nothing if I stay clear of that minimum), and some charge me more (relatively) if I make less than a certain amount.

To clarify:

VAT only “charges” me if I make more than about 60,000 NIS a year. (Yes, I realize it’s more complex than that, they don’t really charge me etc, but for the sake of my own radar, let’s keep it at that.)

Bituach Leumi charges me a minimum of about 80 or 110 NIS a month (I can’t remember and can’t be bothered to go find the paper that hinted at this number). This is even if I make 80 NIS a month, or less – even someone who is unemployed is required to pay National Insurance premiums monthly. And once you make more than 17,443 NIS a year, your premiums go up (not sure how much, but it starts at about 6% I think (that’s about 1000 [the premium you pay annually for up to the minimum income rate) divided by 17443 (the minimum income you start paying more than the minimum premium on).

Here are the other offices that care about my income as an atzmai (and even as an employee, for the most part):

The IRS: Evidently, if you are a US citizen, you are required to complete an annual tax return. In principle, you will owe no income tax if you make less than some amount (depending on number of dependents etc.) For me, this number seems to be a walloping $70,000 or $90,000, whatever, they are both pie in the sky right now. BUT, you are entitled to up to $1000 per child rebate (I use the good help of Jeff Melamed for this http://groups.yahoo.com/group/ustaxreturnREFUNDS/). That “Up To” depends on your income. When you start making less than a certain amount, then your rebate per child is less. This depends on the number of kids you have etc. etc., my “aim for” amount to get the the maximum is about $46,000 a year household income.

FBAR: This requirement is not a tax, it is simply a reporting requirement. If you have a cumulative balance of more than $10,000 in all of your overseas (i.e., not USA) accounts, including banks, keren hishtalmut, and dunno what else, you have to report all of these accounts. You get to the cumulative balance by finding the highest recorded balance of each account for the year (say, Feb 15 for one bank, Dec 31 for the just-put-in account) and adding them up. This thingie got a lot of press this year, because it is the first time they are clamping down on enforcement, with draconian penalties threatened. (If you are interested, I checked my balances for every year since 2003, the year they are checking on since nowadays, and I was only on their radar for 2 of those years). (This link is a good start if you haven’t heard about this until now: http://muqata.blogspot.com/2009/06/us-citizens-in-israel-have-you-filed.html)

Doch Shnati: As I have blogged here before (most of this blog is about this), if you keep pretty good records of your income and your spouse’s income, then go ask for help towards the deadline during Mas hachnasa’s free advice hours, you should be OK. BTW, for me, I think I would have had to staert paying Israeli Income Tax at household income of no less that 200,000 NIS a year.

So, if you have the same factors as me, then here are the annual numbers that raise a flag:

17,443 NIS – what to aim for if you want to pay the lowest amount percentage and cash-wise for Bituach Leumi.

60,000 NIS – when an Atzmai moves from being an Osek Patur to an Osek Mursheh.

$10,000 – FBAR reporting requirement

$46,000 – household minimum to get the maximum Child Tax Credit refunds

200,000 NIS – start paying Israel Income Tax (Mas Hachnasa)

$70,000 – start paying US Income Tax

DISCLAIMER: I wrote most of the above from my own limited knowledge, with barely even using Google. I hope I haven’t made any glaring mistakes, and I will appreciate any corrections and additions.

Comment away!