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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22704
Experience:  Taxes, Immigration, Labor Relations
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I have a client from Israel who came to US 12 years ago, became

Customer Question

I have a client from Israel who came to US 12 years ago, became US citizen, invested in Real Estate in US, but is now going back to Israel to die. He is currently in his 80s. What tax burden does he carry from US to Israel, or visa versa?
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
As an US citizen - your client will be required to report all worldwide income on his US tax return.
In case the same income will be taxable in both countries - the person may claim a foreign tax credit for taxes paid in a foreign country - thus there will not be double taxation.
In additional - if your client will receive an earned income while in Israel - he might be eligible to exclude that income from US taxable income.
In case your client will have more than $10,000 in a foreign bank account during the year - he will be a subject of FBAR reporting.
You might want to review US-Israel income tax treaty that address some specific situations - http://www.irs.gov/pub/irs-trty/israel.pdf

Regarding tax liability to Israel authorities I suggest this Customs Guide for Olim and Returning Residents - http://ozar.mof.gov.il/customs/eng/oleh_eng.htm
Please pay attention for some tax reductions for returning residents.
Individual income tax rates in Israel are progressive and generally higher than in the US - 10%-45%.
Minimum tax rate for passive income (e.g. business rental) is 30%.
Let me know if you need any help.

Customer :

You are missing the point. The point is that the client has assets in US that are above the million dollar mark, and he is worried about what will be with estate tax should he expire soon. Should we have the property passed on to his heirs while he is still alive by the way of an estate being set up or have a trust set up in the heirs name with the property of the father sold to the trust at cost?

LEV :

If you are worry about estate taxes - there is no estate taxes for estates below $5,000,000.
Israel doesn't have estate tax.
If assets are sold - there will be taxable capital gain - and it will be taxed in both countries.

LEV :

Setting the trust hax nothing to do with the tax burden - but will help to avoid probate.

Expert:  Lev replied 3 years ago.
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