Your Israeli Tax Return, Handled

If you are an Israeli tax resident, you may be required to file an annual return (Form 1301) regardless of your US citizenship. Israel exempts some salaried employees from filing, but that exemption falls away in many situations common to Americans here: self-employment income, being a controlling shareholder, holding foreign assets or foreign financial accounts above the annual threshold, significant securities activity, rental income, or a foreign pension. A change that applies from 1 January 2026: new olim and veteran returning residents who became Israeli residents on or after that date must file an annual return and report their foreign income, even though the income itself remains exempt during the benefit period. The exemption from tax stayed; the exemption from reporting did not. This reporting obligation also covers trusts, which carry their own registration and reporting requirements in Israel. Your US filing obligation is separate and does not replace the Israeli one.

Form 1301 is the Israeli annual income tax return for individuals. It reports your worldwide income for the tax year, along with the schedules that apply to your situation. It is normally filed online, and the Tax Authority cross-checks it against Form 106 from your employer, bank data, property records and information received from abroad.

It depends on where the income arises and which country has the primary right to tax it. In most cases for Americans living in Israel, the Israeli return is prepared first, because the Israeli tax paid is what supports the foreign tax credit on the US return. Filing in the wrong order can result in double taxation, which you would then have to reclaim from whichever country it occurred in. That is a refund process you can avoid by planning both returns together.

Form 106 from every employer (the annual summary of salary and the deductions withheld from it), annual statements from Israeli banks and brokerage accounts, National Insurance documents, documentation of any foreign income and foreign accounts, bookkeeping records if you also operate a business in Israel, and your US return for the same year. Rental agreements and property documents where relevant. If you are a new oleh, also the documents that establish your residency start date.

Through the US-Israel tax treaty and the foreign tax credit mechanism. Each country generally allows a credit for tax paid to the other on the same income, but the credit is limited and depends on how the income is classified in each system. Classification differences between the Israeli and US systems are where double taxation usually occurs, which is why the two returns need to be coordinated.

For the 2025 tax year, online filers had until 30 June 2026 and paper filers until 29 May 2026. Filers represented by a licensed accountant generally receive an extension under the arrangements between the Tax Authority and the professional bodies.