U.S. Tax Returns: U.S. Tax returns will continue to be filed as long as the new oleh remains a U.S. citizen or resident. Israeli Tax Returns: Assuming the new oleh is considered an Israeli tax resident, he generally will not have to file tax returns for 5 years from the date of aliyah. Most new retired olim will benefit from the 5-year exemption granted to new olim on interest, dividends, rents, royalties, and pensions. Capital gains on assets acquired prior to aliyah generally have a 10-year exemption. There are many exceptions especially with respect to work income, sale of assets acquired after aliyah, assets owned in excess of certain net worth levels and other matters.

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If you don't file you may be subject to severe penalities by the IRS. In addition, the IRS can levy a tax and put a lien on your financial accounts. The IRS can also instruct the finanaical institution to withhold tax at source, regardless of whether or not you are a U.S. citizen and filed Form W-9. In addition, you may be denied a passport renewal, Social Security Benefits and other benefits such as the U.S. child credit. Israel may also levy penalties for non-filing.

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This depends on the type of income. For example, U.S. sourced private pensions are generally taxed in the U.S. first and any tax paid can generally be credited against Israeli income taxes. Income from Israeli sources is first taxed in Israel, and the income tax paid can generally be credited against U.S.Taxes.

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U.S. Tax Returns: U.S. citizens who are residents of Israel or are physically present in Israel for 330 days of the year are entitled to exclude from their income the first $85,700 of earned income. Please note that U.S. self-employment tax must still be paid if an individual is self-employed in Israel. Israel Tax Returns: You are taxed in Israel first and may receive a credit on your U.S. tax return for taxes paid to Israel. New olim pay reduced Israeli income taxes for the first 3 1/2 years (the maximum Israeli rate is being reduced to 44% by the year 2010). Please note that the 5-year exemption period from tax on passive income does not apply to work income.

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Israel generally taxes U.S. private pensions (such as IRA's, 401k's, corporate pensions, etc.) at the same rate that the pension would have been taxed had the taxpayer remained a resident of the U.S. According to the U.S.-Israel Income Tax Treaty, U.S. and State public pensions are taxed in the U.S. only. Tax on U.S. passive income is generally taxed in Israel after 5 years at rates between 10%-25%.

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The answer to this question may be quite complicated and involves a through analysis of whether or not the individual is considered an Israeli or U.S. tax resident. This includes reference to U.S. and Israeli tax law and the U.S.-Israeli Income Tax Treaty. In general, if a person makes aliyah, has his center of life in Israel, (i.e. owns a home in Israel, has family in Israel, most social activities occur in Israel, etc.), and spends over 183 days in the current tax year or 30 days in the current tax year and 425 days in Israel over a 3 year period, he would generally be considered an Israeli tax resident and be subject to Israeli tax.

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Yes. You generally need to file a partial year State income tax return in the year that you make aliyah. After that, unless you have a nexus (strong connection) to your State (i.e. income from rentals, partnerships or S corporations, or work income, etc.), you would generally NOT have to file a State tax return for years after you make aliyah.

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No. U.S. tax-exempt income is generally taxable in Israel at 20% after the first 5 years from the date of Israeli tax residency. As such, proper investment planning is strongly encouraged.

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The answer to this question is quite complicated. In general, trusts formed by a foreign resident are exempt from Israeli taxation. Trusts formed by Israeli residents are taxable in Israel. These rules generally apply regardless of where the beneficiary resides.

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No. You should normally take financial information used for your tax returns for the last 7 years. Tax returns should be kept indefinitely. Cost information on securities purchased should be kept in order to compute capital gains and losses on future sales of capital assets.

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U.S. citizens abroad have a 2 month automatic extension to file their U.S. taxes until June 15th of the following year. Israel returns are generally due on April 30th and extensions are also available.

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contact the U.S. Embassy (Tel Aviv) or U.S. Consulate (Jerusalem) that takes care of Social Security and other related issues. You can also visit the Social Security Website at www.ssa.gov for more information. (See our INTERNET LINKS page to access these sites).

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