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The state owes us billions, how do we get the money back? - Walla! Of money

2022-05-18T05:02:48.558Z

The state owes us tax refunds totaling NIS 3.6 billion. Following the update on the credit to parents, here are some tips to help us get money back from the state



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The state owes us billions, how do we get the money back?

The state owes us tax refunds totaling NIS 3.6 billion.

So why do only 8% of employees in Israel receive tax benefits from the state - and what prevents the remaining 92% from doing so?

Following the update on the credit to parents, here are some tips to help us get money back from the state

And Kimchi, CEO and Founder of Fibo

17/05/2022

Tuesday, 17 May 2022, 18:04 Updated: Wednesday, 18 May 2022, 07:59

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Yesterday, the Knesset approved the increase in the work grant and tax credit points for parents of children aged 6-12.


Many families with children were happy to hear about the announcement that their monthly expenses are expected to be reduced, but in practice something else is happening and 92% of all employees in Israel will probably never receive the money they deserve.



The principle of the benefit is clear: to give a financial incentive only to those who work and pay taxes to the state.

But will it help in the war on the cost of living?

Not sure.

What it will provide is a release of disposable income for parents that will allow them to spend more (or reduce the deficit), and increased consumption that will not lower costs but only make higher prices more bearable.

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Parents of children aged 6-12.

What can you do to take full advantage of the new tax benefits (Photo: ShutterStock)

Most eligible people do not know that they deserve money back

The first problem is that once you give a tax benefit, you do not receive it directly from the state.

It is not money that is deposited directly into the account, like a child allowance.

There is a complex calculation here that takes into account the various components of the salary, passing through the employers and more precisely, through the payroll accountants.

One of the biggest problems when it comes to parenting and tax is that employers calculate each spouse separately, so there is no consideration for the other spouse's income (or non-income), or tax benefits that can affect both spouses.



The second problem is that employers are aware of the tax benefits we receive through a form we fill out at the beginning of each year, Form 101. But when updating a tax benefit (as a temporary order, for one year only) mid-year, it is important .



We assume that there will be employers who will raise their heads and act to inform the employees about the benefit, and in contrast there are those who will say to themselves, okay, that they will ask for a tax refund in retrospect.



And this leads us to prevent the country's incredible revenue stream, overcharging taxes.

In the latest State Comptroller's report published, the State Comptroller estimated that the state coffers have more than NIS 3 billion collected in excess from Israeli citizens. Only 8% of employees actually use it.According



to an ad survey conducted by Fibo in 2021, only 53% of respondents at all were aware of the fact that they could apply for a tax refund.

Roi Kimchi, CEO and founder of startup Fibo (Photo: Dror Einav)

Have you had a child?

Do not forget to tell the news

In addition, we see huge sums coming back every year to people just because employers have not updated that they have a child.

Therefore, the chances that employers, in the middle of the year, will bother to make these updates are minimal.


The combination of a refund application mechanism that is not really used and a tax payment mechanism through employers that does not really allow employees to exhaust their tax benefits (especially in family cells that are the audience that this tax benefit focuses on), gives us good intentions here, but with good intentions do not go to the grocery store.



Bottom line, there are two options for repair:



the hard option, is to change the mechanism so that the income tax payment is direct and not through the employer, then the income tax will update every year how much to pay them and the benefits will already be updated internally.



This is probably not going to happen, so the realistic option is for the IRS to automatically refund what is taken over, because they have most of the information already updated with them.



Still, here are some tips that are important to know before approaching the subject:



1. The main reasons for eligibility for repayment are

Knesset, completion of an academic degree, mortgage / life insurance, wage gaps between married couples and job exchange

. There are many more reasons so in any case you should check eligibility 2.



If you have decided that you want

to apply for a refund on your own

, the IRS tried to make the issue accessible and created a simulator that allows anyone to enter data and calculate on their own whether they are eligible for a refund or not. If you have basic accounting knowledge, Application for a

tax

refund.

In any case, there are quite a few companies that will do the test for you, including the calculation, for free



.

, And can be submitted up to 6 years retroactively (6 different applications are submitted).

2019 and 2020 can be submitted digitally on the Tax Authority website.



4.

If you have taken out a mortgage in the last 6 years

, chances are you have taken out mortgage insurance.

Mortgage insurance is basically life insurance, which increases the chances that you deserve a tax refund.



5.

Those who earned a salary higher than NIS 649,000 in 2021 must submit an annual report

, which is the same form as the tax return application form. It happens quite often that people must submit a report but are not aware of it, so it is worth making sure.



The author is Roi Kimchi, CEO and founder of startup Fibo

  • Of money

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Source: walla

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