Tax Authority: A department in the Ministry of Finance or a safe containing a billion shekels, some of which also belongs to us?/official website, Eyal Yitzhar, Globes
Tax refunds are one of the most well-known tools for receiving surplus funds paid to the state by its citizens – yet many in the Israeli public refrain from checking their eligibility. Today there are many ways to get tax returns easily, and digitally without having to pay thousands of shekels or even leave the house. So why does the state coffers receive a billion shekels each year that belong to the public? And what do you need to know when you want to get a tax refund?
Six years have passed since 2017 ended, and in three months the last option for citizens to receive tax refunds for the period will also run out - and the funds will be transferred to the state coffers.
In the past, receiving tax returns was considered a complex event that required professionals and experts who could extract for the public the funds trapped in the Tax Authority, but nowadays there are technological and innovative tools that can, for free, clarify your eligibility for tax refunds, without you having to lift a finger.
Avi Rosenbaum, an expert in the field of tax and pensions and CEO of Tax:on, a company that specializes in tax returns, has formulated 12 winning tips, with which everyone can get every shekel they deserve back from the state, and along the way, you wouldn't believe it, also pay as little taxes as possible in general
Drowning in numbers? Here are 12 simple rules to help you get the tax refund you might deserve/ShutterStock
The tax rate you pay is determined at the beginning of the year, based on estimated annual income. In cases where there has been a change in your annual income (unemployment, layoffs, switching jobs, etc.), or if you haven't used up all of your credit points (we'll get to that right away), you've probably paid too much tax, and you deserve a refund from the Tax Authority.
2. What is the most common reason for reimbursement of employment continuity tax? In any case where your annual income has been affected – layoffs, unpaid leave, change of job, unemployment benefits, etc. – there is a high chance of a tax refund. This is the place to mention the Corona period (2020-2021), when hundreds of thousands of employees were placed on unpaid leave or left their jobs. Now, those employees who were injured are likely entitled to a tax refund from the state.
3. What are credit points?A kind of bonus you receive from the state, which reduces your tax liability. As of 2023, a credit point is worth NIS 235 per month, or NIS 2,820 per year. Each employee is entitled to 2.25 credit points, and each employee is entitled to 2.75 credit points.
In a quick calculation, this is thousands of shekels a year, which is reflected in your annual salary. Therefore, it is very important to verify at the beginning of each year (and during it) that you have updated your employer using Form 101 regarding any change in your personal status (marriage, divorce, birth of children, completion of degree, termination of military service, percentage of disability, etc.). Didn't you do that? There's an excellent chance you're entitled to a tax refund.
4. Do you haveprivate life insurance or mortgage? You probably deserve a tax refund. Private life insurance entitles you to a refund of up to 25% of the premium paid, and this amount may reach over NIS 1,000 per year. If you have a mortgage, the bank obliged you to take out mortgage (life) insurance, and you almost certainly deserve a refund.
5. Did you donate funds during the year? You probably deserve a tax refund. If you donated over NIS 200 to recognized institutions for donations (you can check if the institution is tax deductible at this address), you are entitled to no less than 35% of the amount of the donation back, as a tax refund.
6. Are thereother reasons for a tax refund? Private deposits of funds in a pension plan, payment of tax on withdrawals of funds from pension plans (provident, pension, insurance, study fund), payment of tax on compensation after the termination of the transaction, realization of profit or loss in the capital market, receipt of rent on an apartment you own.
7. Residence in a qualifying locality, the status ofa new immigrant or returning resident, and additional eligibility conditions may increase your tax refund.
8. For what years can I get a refund? The Tax Authority allows you to receive a tax refund up to 6 years back. After that, the tax year becomes obsolete, and it is no longer possible to get a tax refund for it. In other words, December 31, 2023 is your last chance to check and get your 2017 tax return. According to the State Comptroller's report, about NIS 1 billion is waiting there.
9. Can I check only some of the years?Not recommended. When the Tax Authority receives their request for a tax refund, it usually checks your status for the last 6 years. If some years have debt, it will be deducted from your repayment, so in the end, you may be left with a debt to the authority. Therefore, it is important to always check the entire last 6 years, to get a complete and complete picture before applying for a tax refund.
10. There are 3 ways to do this: independently through the digital service of the Tax Authority, which requires some professional understanding and a lot of patience; Through a tax advisor or accountant, but this is a relatively expensive service, which usually includes a fee for opening a file, handling fees and sometimes also a percentage of the amount of the refund. Or with the help of technology companies (such as Tax:on), which handle tax returns online digitally, pull the relevant information by computer, and provide a solution even for those who do not want or cannot obtain relevant documents from the Tax Authority and the National Insurance Institute.
11. Can Icheck without "waking up" the Tax Authority? Yes. When done independently, submitsWill fulfill the request and hope for the best. However, with the help of smart systems such as Tax:on, it is possible to perform an independent eligibility check separate from the Tax Authority's systems. So if there is a refund, you can submit the application with peace of mind, and if there is no refund or there is a debt, simply forgo filing the report.
12. How long does it take to receive the money?Between a month and a year, depending on the tax assessor who handles your case. But be aware: your tax return carries interest and indexation. In other words, this is a savings plan with excellent conditions, and with each passing day - your tax refund only increases.
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Avi Rosenbaum, CEO of Tax:on/Anet
When it comes to paying taxes, it's always important to remember: if you don't be proactive and demand all the rights you deserve, you'll pay a lot more. In a situation where the employer does not receive the full information from you, or you do not require the Tax Authority to receive a tax refund, you can lose thousands of shekels a year.
The most important recommendation is to submit a tax refund application as soon as possible in order to find out about eligibility for funds that belong to you and you can get back with a small effort, without obligation and in some companies – even at a very low cost.
Avi Rosenbaum, a senior manager in the world of insurance and finance. One of the owners of Tax:on, he previously held a variety of positions, including CEO of Clal Pension and Provident Fund, Deputy CEO of Clal, Chairman of Tamura Insurance Agency, Director of the Professional Staff and Retirement Department at Mivtach-Simon – Israel's largest settlement agency, and more. Today, in addition to his role as CEO of Tax:on, he works as a lecturer and expert in the field of long-term savings, with an emphasis on pension taxation in retirement.
Tax:onis a technology company that develops tools for wise consumer behavior, and specializes in tax returns for employees. The company has developed a smart system that handles the entire process of receiving a tax refund automatically, including a free and no-obligation eligibility check, and a fixed and predictable price for full tax refund processing. The owners and managers of Tax:on are senior and well-known figures in the field of insurance and finance. The company's team includes about 15 developers, accountants, tax consultants, digital experts and service representatives.
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