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How can you take advantage of your rights in Israel before the end of the year?
Towards the end of the tax year, November and December offer an opportunity to exercise your rights in Israel that can save you money.
This guide summarizes the rights in Israel that can be exercised, in a few simple steps, before the end of 2021.
Please note that some rights in Israel can only be exercised until the end of the year, and some even until the end of November.
The guide lists the rights of employees as well as those of self-employed workers and employers..
ATTENTION
This guide contains information on the last few months of the calendar year. This may be your last chance to take advantage of some of your rights in Israel.
We will proceed as follows throughout this article:
- Establish your situation,
- Determine what you need to do,
- Explain why it's important to act before the end of December.
Employees
Have you requested the Maanak Avoda (negative income tax) for 2020?
Hurry up and apply for the Maanak Avoda.
A claim for 2020 must be submitted to your nearest post office or on the Israel tax website.
Employees or self-employed people who received income from work or business in 2020 and for whom all conditions are met may be eligible for Maanak Avoda.
If you have not applied for a work subsidy in the last two years, you can only apply for 2020 at post offices until 31.12.2021 (if you have applied in the last two years, you can apply online by the end of 2021).
Have you applied for Maanak Avoda (negative income tax) for 2019
If your income met the criteria to receive the subsidy for 2019 and you didn't have time to submit an application on time, hurry up and submit an application to the tax authorities in which you explain why the application wasn't submitted on time.
The claim must be submitted before the end of December 2021. After this date, it will no longer be possible to file a claim for 2019.
Note such a request must be submitted to tax authorities and not to the postal administration.
The opportunity to apply for a subsidy for fiscal year 2019 has ended at post offices, but under certain conditions an application can be submitted under a special procedure until end December 2021.
If you have applied for a work grant in the previous two years, you can submit online application for 2019and that too only until the end of December 2021.
Application to Bitouah Leoumi for refund of taxes or social security contributions
Do you deserve an income tax or Bituah Leoumi refund for the 2015 tax year?
Hurry up and submit your income tax refund or Bitouah Leoumi claim before the end of December.
Refunds can be requested up to 6 years in the past.
After the end of 2021, it will no longer be possible to submit claims for 2015.
Do you have income for which no amount has been set aside? sideways for retirement or training funds?
Self-employed and salaried workers can deposit pension amounts independently and benefit from tax advantages.
The self-employed can also deposit in a training fund and benefit from an additional tax advantage.
Employees can benefit from a tax advantage over and above the benefits granted to them as a result of the provisions set aside through their salary, if the employer's provisions are not calculated on the basis of all salary components or if the amounts set aside have not exceeded the legal ceiling.
The benefit will only be granted to employees whose salary or income is tax-deductible. (If an employee earns a low income, which is not taxable, there is no expectation of a tax refund).
To take advantage of the tax benefits, deposits (contributions) must be made no later than the end of December 2021otherwise the tax advantage will not be available.
If you wish to deposit money in an investment pension fund, you must deposit up to 70,913 Nis of the amount before the end of December.
An investment provident fund is a savings vehicle that allows you to save independently for as long as you wish, and is particularly suitable for those interested in financial planning for retirement.
Funds deposited in the pension fund are liquid at all times and can be withdrawn without penalty or tax, with the exception of capital gains tax on profits accumulated to the initial amount.
What's more, those who choose to withdraw the funds in the form of a monthly annuity after age 60 (rather than withdrawing the entire amount at once) will benefit from a capital gains tax exemption on the profits accumulated in the fund, and the annuity will also be exempt from income tax.
Each person may deposit a maximum of Nis 70,913 per calendar year in an investment provident fund.
Consequently, those wishing to deposit more than NIS 70,913 can take advantage of December and deposit up to Nis 70,913 during it, and in 2022 they can add up to a further Nis 70,913.
Are you defined as an "ossek patour" with sales in 2021? of 99 893 Nis?
A ossek patour is a VAT-exempt contractor.
In order to continue to be defined as an Ossek Patour, your annual sales must not exceed an annual ceiling of 99,893 Nis.
We're talking about revenue (amounts received) here, not your annual profit.
Therefore, if you are approaching this ceiling, and a customer has to pay you, at the risk of you exceeding the ceiling, we suggest you defer payment, so as not to exceed the ceiling and continue to be exempt from VAT for 2022 too.
Please note: an Ossek Patour invoicing companies (and not individuals) has no "advantage" in shifting its cash flow. In fact, even if you are subject to VAT when you switch to Ossek Mourché, you will be able to invoice your customer exclusive of tax + VAT, and your customer will be able to reclaim the VAT paid. So there's no financial impact.
Have you increased your provisions for pension contributions?
An employee can ask his employer to increase the rate of pension insurance deposits deducted from his salary (employee share only) to 7% of salary instead of 6%, thus benefiting from a greater tax advantage.
In addition, an employee can make independent monthly deposits into pension insurance (rather than through salary), thereby increasing the tax advantage he or she enjoys.
Increasing the rate of pension insurance deposits or self-employed deposits in addition to the salary provisions will enable the employee to benefit from tax advantages also for salary components for which amounts are not reserved for retirement through the salary (uninsured salaries, such as: bonuses, overtime, transport and bonuses).
The advantage will only be granted to an employee whose salary is deducted from income tax (employees with a low salary whose tax is not deducted will not benefit from the tax advantage).
Given that income tax is calculated annuallyHowever, amounts not deposited by the end of December will not be eligible for the annual tax benefit.
An employee who is hired while insured with a pension fund will be entitled to provisions from the first day of work. Provisions will be made after 3 months' work or at the end of the tax year.
The employee must ensure that his employer actually transfers the reserves before the end of the tax year.
Indeed, if the transfer has not taken place, as income tax is calculated annually, the employee will not be able to benefit from the tax credit given that year, and may pay a higher tax than he or she was supposed to.
What was your situation this year?
- Have you had more than one job this year?
- Did you change jobs during the year?
- Were you unemployed during the year?
- Did you stop working before the end of the year?
It is advisable to coordinate Bitouah Leoumi contributions, which can be done by directly with the secondary employer without needing to contact the Bintuah Leumi (via a declaration of your salary level from your main employer).
If you have worked at different workplaces during the year (even at different times), or if you have been registered as unemployed, the income tax and Bitouah Leoumi contributions have been deducted at a maximum rate.
Given that the Israeli system is a progressive tax system, it is highly likely that the amount of tax deducted from your income will be too high.
Anyone who failed to make the adjustments during the year will be able to file a claim for a tax refund next year.
Similarly, an employee who has had social security contributions deducted from his or her salary at too high a rate will be able to claim a refund next year.
- Have you had a child in 2021?
- Have you been divorced during the year?
Contact your employer as soon as possible and update the details. form 101 before the end of the year.
A mother and her spouse are entitled to tax credit points for the child.
A mother who gives birth in 2021 can defer receipt of part of the tax credit to the following year (2022).
This can pay off if her income in 2021 has not reached the taxable amount, and she expects her income to be higher next year.
A parent (male or female) who lives separately from the other parent and is raising children is entitled to one credit point.
If the other parent participates in the children's pension, he or she will also receive a credit point or part of it according to his or her share of the children's savings. Value of benefit: NIS 2,616.
Please note that completing Form 101 at the beginning of 2022 does not apply retroactively and will not allow you to receive the credit for 2021.
If you don't receive the credit in 2021, you can apply for a tax refund in 2022. to the Israeli tax authorities.
Have you lived in a tax-qualified location for more than a year?
If you live in a locality entitled to tax benefits and in 2021 you have completed 12 consecutive months of residence in the locality, make sure the information is updated with your employer and that they give you a tax credit on the pay slip, or ask to update the details on Form 101.
Updating the details before the end of the year will enable the employer to pay you the benefit this year via the retroactive pay slip for the whole year.
Please note that completing Form 101 at the beginning of 2022 does not apply retroactively and will not allow you to receive the credit for 2021.
If you haven't received the credit in 2021, you can claim a tax refund from the Israeli tax authorities in 2022.
Has your child been diagnosed as autistic, blind, learning disabled, paralyzed or developmentally delayed? ?
You need to update your Form 101 details as soon as possible, before the end of the year.
Parents of an autistic child or a child defined as "incapable" can receive 2 points income tax credit.
If the parents are not alive or do not assume responsibility, the benefit will be paid to the child designated as his or her guardian.
The benefit is NIS 5,232 per year.
If you receive a disabled child allowance for the child, you can receive the allowance from the employer by filling in form 101 without contacting the Israeli tax authorities.
In all other cases, you must first contact the Israeli tax authorities and obtain their agreement to grant the benefit, which must be remitted to the employer.
Updating the details before the end of the year will enable the employer to grant you the benefit via a retroactive pay slip for the whole year.
Please note that completing Form 101 at the beginning of 2022 does not apply retroactively and will not allow you to receive the credit for 2021.
If you don't receive the credit in 2021, you can apply for a tax refund in 2022. to the Israeli tax authorities.
Did you donate money to any organizations or non-profits this year?
If you have donated at least 190 Nis over the entire tax year, you can receive the tax refund.
Anyone who has donated 190 NIS or more (from 2021)) to an institution recognized under article 46 is entitled to an income tax credit for this year, up to 35% of the donation.
Vacation and employee rest.
- Did you take less than 7 days off this year?
- Do you have vacation days from previous years that you haven't used?
Hurry up and ask your employer to take extra days off so you can enjoy at least 7 days before the end of the year.
By law, an employee can accumulate vacation days (with the employer's consent). provided he has taken at least 7 days' vacation in that year. (And only the balance beyond 7 days can be accumulated).
If you don't use 7 vacation days during the year, you risk losing them.
In all cases, the vacation days you have accumulated in a given year must be used in the next two working years, otherwise they may be deleted and it will not be possible to use them.
SELF-EMPLOYED WORKERS AND EMPLOYERS
- Have you deposited any money in pension insurance this year?
From 2017a self-employed person with business income must make independent pension contributions.
Deposit rates range from 4.45% to 12.55% of taxable income.
Those who make independent deposits to their pension fund may be entitled to tax benefits.
Only if the amount of your income is tax-deductible. A Ossek mourche or a Osek Patur who would not be taxable anyway, will not benefit from the tax advantage.
A self-employed person can increase the amount of pension contributions up to 16.5% of taxable income and benefit from a higher tax advantage.
In order to benefit from the tax advantage on income for 2021, deposits for must be made before the end of the tax year in question..
Amounts not deposited by the end of December will not be deductible.
How to save taxes in Israel for 2021?
Do you have funds available and are looking for a tax-free investment channel?
A self-employed person can independently deposit up to 4.5% of annual income and up to NIS 11,835 per year (from 2021) in a training fund, Keren Ishtalmout.
He will benefit from a tax advantage that will reduce the amount of income tax he has to pay. Additional amounts can be deposited, but will not benefit from the tax advantage.
The second advantage exempts the training fund from paying capital gains on the profits it receives for all amounts deposited each year not exceeding 18,480 NIS (from 2021).
A deposit to an independent study fund does not require a fixed monthly deposit, but allows you to choose between a continuous allocation of funds and a periodic deposit of lump sums.
In order to benefit from the tax advantage on income for 2021, deposits for Keren Ishtalmout must be made before the end of the tax year.
Amounts not effectively deposited by the end of December will not be eligible for tax purposes for the year.
It is not possible to deposit the funds next year and benefit from a tax advantage retroactively for the current year.
Tax benefits for self-employed people who save for their employees.
If you've hired a new employee who already had a pension fund when he or she started with you, pension contributions become compulsory after 3 months or at the end of the tax year.
So be sure to transfer all pension contributions before the end of the tax year, or risk financial penalties if you fail to do so.
You don't pay your Bitouah Leoumi dues by direct debit?
A self-employed person must contribute to Bitouah Leoumi during the current year.
This will be recognized as a deductible expense in the year in which the payment is made. reports, thus reducing the tax he has to pay that year.
