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Douglas Goldstein - Yosefa Huber - Why You Need an American CPA Even if You Live in Israel

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Author: Douglas Goldstein
Categories: History Personal Finance
Tags: history, finance
Views: 2 · Last viewed: 2026-10-15 07:50 UTC

Short Summary

Main recommendation: US citizens and green card holders living in Israel should still file a US tax return every year they have income, and should hire a qualified US CPA in Israel to do it, rather than relying on free online software or an old US accountant. Filing is required even when taxes are withheld in Israel, when income is paid in cash or into a foreign account, and when the taxpayer expects a refund. Separately, the FBAR (Foreign Bank and Financial Account Report) must be filed for foreign bank accounts each year.

Key Points

  • Filing is required regardless of where you live or how long you have been abroad. The speaker says most countries do not impose this requirement, but the US does, for any year with income.
  • Any payment for work counts as income, whether paid in cash, into a US account, or into an Israeli bank account.
  • Signing a W-9 with an Israeli bank does not satisfy the reporting obligation. The bank's form only lets the bank share information with the IRS.
  • Paying Israeli tax does not eliminate the US filing requirement. You must file to claim a foreign tax credit or the Foreign Earned Income Exclusion.
  • Most clients receive refunds, but they still must file to report income and explain why they owe nothing.

Details Worth Noting

  • Concrete instructions:
    • Report all income from work, including cash payments and payments to any bank account, once it meets the minimum filing threshold.
    • Sign and file the FBAR every year for foreign bank accounts. The FBAR may be filed yourself if you want to save money.
    • Use a qualified US CPA based in Israel for your tax return, since free online tools such as TurboTax and H&R Block Online make it hard to report everything correctly.
    • Do not rely on an old US accountant who lacks details about Israeli accounts and income. Switching to an Israel-based US CPA is recommended.
    • File a tax return even if you expect a refund, in order to claim the foreign tax credit or the Foreign Earned Income Exclusion.
    • Check for self-employment tax obligations. The speaker said double taxation often comes from Social Security, which self-employed people frequently must pay in addition to Israeli taxes.
  • The Foreign Earned Income Exclusion was described as roughly $100,000 a year. Claiming it still requires filing.
  • The two most common ways people owe US tax are self-employment (referred to as "ossek patur" or "ossek murshe" in Israel) and rental property in Israel. Israeli rental income is taxed at a low rate, but US rates are regular rates.
  • The speaker said reporting obligations (both income and FBAR) continue for green card holders even if the green card has expired.
  • The speaker said she moved to Israel 23 or 24 years ago and initially used TurboTax herself, and noted that Israeli bank statements are often in Hebrew.

Bottom Line

Living in Israel does not end a US citizen's or green card holder's tax filing duties, so the practical step is to file each year with a knowledgeable US CPA in Israel and to file the FBAR on time.