Chasing the Fionist Dream

Have you ever filed an Israeli tax return? If you are a salaried employee in Israel, you are probably grateful for the fact that you don’t HAVE to. Your employer takes care of it for you. But can you? Should you?

You may remember that we paid a company to do our tax return last year since we had made some changes in our investments, which made the process more complicated. This year we did it on our own for free. What’s better than unexpected cash that you don’t have to pay someone to get for you? Our projected tax refund is enough to cover summer camp for our one of our kids this year. That’s huge! If you are interested in a potential tax refund for your family, read on as we try our best to answer your questions below.

Am I eligible for a tax return?

Have you made any charitable donations in the past year (or six)? Had a baby? Been unemployed? Switched jobs? You may have overpaid on your income taxes. As you can file up to six years back, and you may have done some of those things in that time, it’s worth checking if you are eligible. Additionally, if you donated at least 190 shekels to Israeli charities or paid mortgage-linked life insurance in any particular tax year, you are eligible to request part of it back from the tax authority. You can plug your information into a simulator to get an estimate of what you can receive back. While it’s not 100% accurate, it’s pretty close. So if it says you aren’t eligible, it’s not worth your time applying.

How do I apply ?

If you are a salaried employed in Israel, you should receive a 106 form from your employer each March. Speak to your employer if you didn’t get one, since it is one of your employee rights. A 106 is a summary of all of the tlushim you received from your employer over the course of a calendar year.

Your 106 is divided into a few sections. You can see what your employer paid you, what they deposited into your pension and Keren Hishtalmut, and any other deposits that your employer made on your behalf. You can see a model 106 form below. This form will be your key tool for submitting your tax return application, so hold on to it.

Take a look at your 106. You will notice next to most of the lines are numbers in parentheses. For example (158, 172) is your total gross annual income from your employer and (042) on the left is how much income tax you paid. These numbers are meant to help you fill out your tax return application. Items with two numbers (e.g. 158, 172) are designed for dual income households as you will have to fill out information for both spouses.

In addition to your 106, you might need some other documents.

1. Form 867, which shows the taxes you paid on your investments or savings. You can download this from your account on your bank’s website. If you have investments anywhere else, make sure to download your 867 from there as well. Like the 106, it will have the number connecting to the tax form in parentheses.
2. אישור מס על ההפקדות from your mortgage life insurance. This form will have the same handy number clues as the others.
3. All receipts from donations you made that year.

Go online and open the tax return application form (form 135). Log in. Now all you have to do is match the fields to where they go and fill in all of the numbers. If one spouse has more than one job (and thus more than one 106), add the numbers from that line on each 106 together and input the total into the correct line on the application form.

You can do a tax return up to 6 years back. This means that if we are now in 2023, you can do it for years 2022, 2021, 2020, 2019, 2018, and 2017. Each year requires its own form. You choose the year in a dropdown menu when you start.

Once you finish filling in the form and attach all of the required documents, submit your application and pat yourself on the back! Mazal tov! Not only do you potentially have a tax refund coming your way, you get to keep all of it, since you did it all by yourself and didn’t pay someone to do it for you.

What if I made a mistake?

Don’t sweat it. The tax authority will contact you and clarify. If you are missing something, they will give you an opportunity to fix it.

What if I feel like this is really beyond me and I’m scared to do it myself?

First, run the simulator to see if you are eligible for a return. Provided you are:

• If you have the time to head down to the Income Tax Authority, they run free clinics this time of year to help you apply for a tax return.
• If you don’t have time for that, pay a professional to do it for you. You will either pay a set fee or you will pay a percentage of your projected return. Either way, you will end up with more money than had you not filed.

Have you filed for a tax return before? What did you do with your refund?