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!


Don’t Worry, Be Happy!

August 4, 2009

Someone posted this as a comment somewhere on my blog, and I thought it can be halpful as a post. Bevakasha!

  1. ari Says:

    hi gidon.

    i’m planning on heading out to the tax offices now to register as an atzmai’i. any advice as i head down this potentially bankrupting, forcing-me-to-move-back-to-the-U.S.-shekeless-road?

  2. Gidon Says:
    Hi Ari,

    Good luck in your endeavors!

    I don’t know the nature and scope of the work you intend to do, but in general, registering as an atzmai is not potentially bankrupting!

    Especially, my “expertise” (sic) is about osek za’ir, which means small business, less than about 60,000 NIS a year (income or profit, or somewhere in between), about 5,000 NIS a month. If you make so little, then chances are the authorities will not require payments or even fines that will bankrupt you.

    This blog focuses on interfacing with bureaucracy, not financial success of your business. As a friend of mine once wisely said, he hopes he gets taxed a lot, because that means he is making a lot.

    If your business idea and execution are sensible and market-driven, then you will probably succeed.

    If you add advice from NBN, MATI, various blogs and websites to that mix, and don’t “jump over your pupik”, then you have a good chance at success, and will probably not be forced to move back to the US without a dime.

    I am sure you wrote some of your comment tongue in cheek, but keep your chin up, be optimistic, and good luck!


Another blog worth looking at

March 25, 2008

http://jobshuk.com/motal7/blog

I think I’ll be quoting or referring to him…