Are you among the many Israelis who might unknowingly be entitled to a tax refund? Millions of shekels lie unclaimed in the tax authority's coffers, and some of it could be rightfully yours. It's a common misconception that only self-employed individuals or businesses are eligible for tax refunds. In reality, even regular employees and pensioners can find themselves overpaying taxes.
The reason for this overpayment often lies in the tax calculations done by employers or banks. These calculations may not always align with your specific financial situation, leading to excess payments. Factors such as incorrect or incomplete filling of Form 101, or outdated personal details that impact tax liability, like the birth of a child or newly determined disability, can also contribute to this discrepancy.
Moreover, there are numerous other reasons that might make you eligible for a tax refund. These include working for an employer for only part of the tax year, working with multiple employers, changes in family status during the tax year, personal payments to pension funds, life insurance payments, donations, and reduced tax rates for individuals over 60.
Filing a request for a tax refund might sound daunting, but it's a process that can lead to pleasant surprises. The key is gathering all relevant documents and submitting an annual report to the tax authority within six years from the end of the relevant tax year. For instance, a refund for the 2018 tax year can be submitted until the end of 2024. The tax authority calculates our taxes on an annual basis, so each year's income must be reported separately, including every shekel earned from various sources during that tax year.
Once you have all the necessary documents, such as Form 106 from your employer and Form 867 from your bank, you'll need to calculate your 'taxable income' by deducting permissible expenses, credits, and personal deductions from your total income.
Most reports can be submitted via the tax authority's website. While it's possible to file independently, it's advisable to read up on the process to avoid errors that could lead to legal issues or missing out on entitled benefits.
Remember, submitting a report to the tax authority doesn't always result in a tax refund and might sometimes lead to additional tax payments. Therefore, understanding your rights and obligations and maximizing your potential for a refund is critical. If in doubt, consulting with a tax professional is always a good idea to guide you through the process and help maximize your chances for a refund.