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J1 / Tax treaty Israel-US

Asked Jan 9, 2011, 06:24 PM — 5 Answers
Hi,

I am an Israeli postdoc under a J1 visa (date of arrival in the United States March 2010). The period covered by my visa is 3 years (March 2010 - March 2013).

I've just received from my employer a letter asking me to fill out form 8233 if I want to benefit from tax exemption under the US-Israel tax treaty. The problem is that the already-filled 8233 form says that my current non-immigrant status expires in 2 years (March 2012) and not in 3 years! I also have to sign a letter saying that I have accepted an invitation by a US university to come to the US for a period expected not to exceed 2 years ... I understand that the tax exemption is for 2 years, but does this mean that I have to change the end date of my visa? If so, what will happen if I want to extend my stay?

Thank you in advance,

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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
Senior Tax Expert
  
#2

Jan 10, 2011, 09:50 AM


I just reviewed the U.S.-Israeli Tax Treaty, and the treaty states the exemption is TWO years from date of arrival.

So while the visa may extend for three years, your tax-exempt period ENDS in March 2010.

So all you need to do is modify the Form 8233 to show the tax-exempt period from March 2010 to March 2010.

Note that, if your salary is tax-exempt and you have no other income source, NO TAX RETURN is required for 2010.

However, you STILL must file Form 8843.

There is NO retroactive tax provision in the treaty, so, starting in April 2012, you start paying taxes.

Also, on 1 Janaury 2012, you become liable for FICA (Social Security and Medicare) taxes as a matter of U.S. Tax law.
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rioli's Avatar
rioli Posts: 1, Reputation: 10
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#3

Jan 12, 2011, 03:51 AM
Comment on AtlantaTaxExpert's post
Quote:
Originally Posted by AtlantaTaxExpert View Post
I just reviewed the U.S.-Israeli Tax Treaty, and the treaty states the exemption is TWO years from date of arrival.

So while the visa may extend for three years, your tax-exempt period ENDS in March 2010.

So all you need to do is modify the Form 8233 to show the tax-exempt period from March 2010 to March 2010.

Note that, if your salary is tax-exempt and you have no other income source, NO TAX RETURN is required for 2010.

However, you STILL must file Form 8843.

There is NO retroactive tax provision in the treaty, so, starting in April 2012, you start paying taxes.

Also, on 1 Janaury 2012, you become liable for FICA (Social Security and Medicare) taxes as a matter of U.S. Tax law.
Thank you for your reply. Just one comment: I assume you mean that my tax exempt periods in March 2012 and not 2010. The form 8233 already states the March 2010-March 2012 period. The point is that my Visa says otherwise...
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jheiss's Avatar
jheiss Posts: 1, Reputation: 10
Junior Member
  
#4

Jan 19, 2011, 04:59 PM
I am in a similar position, J1 from Israel, arrived on Jan 2010, but I am doing a postdoc at a non profit organization (not academic nor gouvernamental). Currently I am paying full taxes, but I know about a Japanese postdoc who got a full return of the money. Does the treaty with Israel apply in this case?
Thanks
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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
Senior Tax Expert
  
#5

Jan 19, 2011, 07:59 PM


JHeiss:

I answered your email earlier today.

Your situation is ambiguous at best. It is likely ypour non-profit employer KNOWS whether they meet the criteria for you to claim the tax-exempt status, so go ahead and ask THEM.
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yaelma's Avatar
yaelma Posts: 6, Reputation: 1
New Member
  
#6

Apr 9, 2012, 04:33 AM
maybe you can help me -
were you invited here for more than 2 years (according to your DS-2019 form).
I'm submitting my tax treay now and I 'm afraid that if the expected duration is longer than 2 years, I dont get the tax back.
So I really needto know - what was the situation in your case?
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