In this article we will explain what a tax refund is, we will note that by the end of this year (2023) the year 2017 will become obsolete for tax refunds, therefore we invite you to submit a final request for a tax refund for the year 2017.

Income tax deductions are sometimes deducted from the employees’ wages during the year in amounts higher than what they have to pay in practice according to law.

There are several reasons for this, one of them is that when the tax is calculated during the year, various data that affect the tax calculation are not taken into account, such as:

Children born in the tax year
Changing jobs in the middle of the tax year
Change in marital status
Completion of a bachelor’s degree
A child with a disability
35% tax credit on donations
An employee who went on maternity leave and returned to work only in the following tax year
Salary increase and more.
Calculation of tax on the income that employees must pay is calculated on an annual basis (total income in the tax year), but in practice the income tax is deducted from the salary on a monthly basis through the pay slip.

The monthly amounts deducted for income tax each month are called “withholding” and are based on an approximate calculation of the employee’s annual income.

Because only at the end of the tax year is it possible to know exactly what the annual income was (as mentioned, the tax on the income is calculated on the estimated annual income). There may be discrepancies between the exact amount that must be paid to the income tax and the amounts deducted from their wages during the tax year that were based on estimated income.

How do you apply for a tax refund?

In order to submit the application, fill out form 1301 / 135.

1301 – Annual income tax report, the report gathers all the information about the past fiscal year, from January 1 to December 31 of last year.

135 – abbreviated account for the tax year.

In the form we will fill in all sources of income. It should be noted that sometimes employees are also required to submit a tax return, among other things, in the following situations:

When there is a high monthly income as an employee, when there is income from a non-profit that was not reported in Israel, when income distribution is performed and other situations

For example:

salary
Income from capital gains and capital gains
Income from SKKD
interest
dividends and more.
Submitting an application for a tax refund for an employee is voluntary (not mandatory) but on the other hand such an obligation applies to the self-employed since he must submit a report every year. The tax return can be submitted for any of the last 6 years, the money can be received up to one year from the date it was made assessment or within two years after the end of the tax year in which the excess tax was deducted (more tax was collected than was actually required).

All reasons for tax refund

Reasons for a tax refund for data from work:

Change in workplaces and changes in salary – as a result of moving to a new place and as there is also an increase in salary, there may be a distortion in the tax calculation. It is important to note, even if the move is made in full overlap with the departure, a tax refund is possible.

Multiple workplaces at the same time – a situation where an employee works at 2 workplaces, in this situation tax coordination is required. It is important to note: if tax coordination was not carried out, the secondary employer is obliged to deduct tax according to the maximum rate (which creates an additional tax deduction) and it is important to understand that even if tax coordination was carried out, an additional tax deduction is still possible.

Form 867/857 – This is an annual tax deduction form from a bank or investment house, the confirmation includes the total sales made, and the tax deducted at source, this confirmation is received in the following tax year.

Compensation – withdrawing compensation money usually happens when moving between jobs, severance pay is considered income and is taxable, the tax will be deducted at source by the insurance company. The exemption ceiling for compensation is 12,380 for each year of work.

Stopping work – an unpaid vacation can disrupt the tax calculation and therefore you may be entitled to a tax refund, as above for a sabbatical year, a sabbatical year disrupts 2 tax years because the sabbatical year begins on 9/1 and ends on 8/30.

Reasons for a tax refund for personal data

Tax refund for studying for an academic degree and certificate studies.

Book settlements – there is a detailed list of settlements that qualify for income tax. For example: Kiryat Shmona, Shlomi, Dimona and more.

Returning immigrants / returning residents

Veterans

Reasons for a tax refund for medical data

Expenses for keeping a relative in an institution

A relative who receives a disability allowance from the National Insurance or who passed the placement committee and more.

There is another wide variety of data and parameters that can result in a credit in the tax calculation and the possibility of a tax refund.

Therefore, towards the end of the 2023 tax year, and the 2017 statute of limitations for the request for a tax refund because you can submit a request for a tax refund up to 6 years back.

We invite you to take advantage of the last opportunity to apply for a tax refund for 2017.

For questions and additional details, you can contact our office at [email protected] or by phone at 02-9992104 extension 656.