Dual Citizenship? (Please respond ASAP)

m in Israel

Mon, Feb 23 2015, 7:14 am

amother wrote:

I recently made Aliyah and work for a US company. Any work performed in Israel even if its for a US company is taxed by Israel and would also be considered taxable income by the USA. If you are an Israeli citizen and you travel to the US an perform work in the US - the payment for that work is not taxed by Israel for the first 10 years after you make Aliyah.

So if you are going to be in the US 30% of the time and Israel 70% of the time, 70% of your income would be taxed by Israel and the US and only 30% would be taxed only by Israel.

The 70% you pay taxes on in Israel, would still be taxable income in the US, but you may pay taxes at a lower rate due to the fact you can deduct the amount of money you already paid in Israeli taxes from the calculation of how much income you earned. So if you made $100, and paid $50 in Israeli taxes, you could deduct the 50 from the 100, and the US would tax you on the 50, but you would still be paying US and Israeli taxes on the same money.

This is another example of someone working for an American company. I am starting to think that must be considered like earning the money in the U.S. as far as U.S. taxes are concerned. Because if you work for an ISRAELI company the way it usually works is the taxes you pay are deducted against the TAXES you owe, not against the overall salary. So if you earned $100 in Israel and paid $50 in Israeli taxes and would owe $30 in U.S. taxes, since you already paid more than that in the Israeli taxes you don't need to pay taxes in the U.S.

So for example in my case, my husband works for an Israeli institution with an American branch. He works mostly in Israel but spends a few weeks a year in America. The part of his salary that he earns for his work in the U.S. IS taxed by the U.S. government, but not the Israeli government due to the 10 year rule. The money we make in the U.S. stock market is also taxed only in the U.S. The part of his salary that he earns for his work in Israel is taxed here in Israel, but NOT in the U.S. (due to the tax treaty) because we pay more here than our U.S. taxes would be on that money. But it is all reported when we file our taxes.

nylon

Mon, Feb 23 2015, 2:31 pm

The tax situation is extremely complicated.

First there is a foreign earned income exclusion for a certain amount, which most foreign residents qualify for--about $100K. Above that the US credits taxes paid under a treaty.

However, depending on the type of income, amount, tax paid, etc - it is POSSIBLE that you could have to pay (as Boris Johnson discovered!) But no one can answer that question in theory. Most people making ordinary salaries in a tax treaty country do not have to pay, though they must file. Any special circumstances and you would best be advised to speak to an accountant.

There is no dual citizenship treaty. The US does not recognize dual citizenship. It does not PREVENT dual citizenship and in fact some of the court cases deciding this involved Israel. But as far as the US government is concerned your dd is an American.

Since Israel does not require you to renounce foreign citizenship, all is fine: you retain your original citizenship (unless the first country has an issue with it, which the US does not). The US considers you an American and Israel considers you Israeli. The practical consequences are this: The embassy of one country can offer you no consular assistance if you get in trouble in the other, and you must enter the USA on your American passport and they are serious about it. Further, if your dd does not return to the US, she will not be eligible to pass on her American citizenship unless she marries another American (there are residency requirements if only 1 parent is American).

There is a way to move to Israel permanently and remain only a permanent resident but I am not sure how this is done. It is done by some Europeans who do not want to jeopardize citizenship of countries such as the Netherlands and Germany that have strong restrictions on dual citizenship. It is not an issue for Americans.

(Not Israeli but very familiar with US dual citizenship as my children, dh and I are all duals of US/UK)

Mrs Bissli

Mon, Feb 23 2015, 6:43 pm

My niece who is a dual US/Israeli citizen and spent vast bulk of her life in Israel was able to get US passports for her children. (Her husband is an Israeli, not a US citizen). Though she had to actually fly in with the children to the US and apply from there.

As for giving children multiple passports--it does become expensive as children's passports expire every 5 years. I keep a spreadsheet with everyone's expiry dates for each of their passports.

Now for automatic Israeli citizenship upon making aliya/receiving the teudat zehut, how does that work if someone makes an Aliya from a country that does not recognise multiple citizenship? (I.e. some countries revoke your citizenship or assume you abandoned citizenship if you acquire nationality of another country?)

Peanut2

Mon, Feb 23 2015, 9:38 pm

Citizenship is complicated if someone leaves the U.S. as a child (or is born in Israel) and wants to pass on US citizenship. It's possible to do it through grandparents or when two Americans have a child together, but is beyond imamother and I'd recommend legal advice it to at least carefully follow info from the consulate and U.S. government directly.

Nylon was spot on and amazing so follow what she said.

Multiple citizenships can be complicated. I am a dual US Israel but my husband had two other ones that have restrictions. We haven't decided what to do about it.

m in Israel

Tue, Feb 24 2015, 1:30 am

Mrs Bissli wrote:

It works according to the rules of whatever country you are dealing with. In some situations you may in fact lose your citizenship in your original country upon making Aliyah. This is sometimes a reason why a person may choose to move to Israel without actually "making Aliyah" (I.e. coming as a "permanent resident"). But as has been said many times on this thread, the U.S. is not a problem in this regard.

nylon

Tue, Feb 24 2015, 7:35 am

My understanding (as explained by the embassy):

If BOTH parents are US citizens then citizenship is passed on if ONE parent has lived in the US at any time prior to the child's birth (this prevents citizenship from being passed on by descent indefinitely)

If ONE parent is a US citizen then the citizen parent must have lived in the US for a total of five years, 2 after the age of 14, again prior to the birth of the child. I was required to provide dates and documentation when I filed for a CRBA for a child in this situation by the way. (this actually only applies after sometime in the 1980s, but it's all that's relevant to any child born now...)

I think there's some complication if the parents are not married, but I didn't pay attention to that bit. Smile