Travel Abroad This Summer and Win the Tax Game

As the summer heat intensifies, the allure of a European vacation becomes increasingly tempting for US citizens living in Israel. With shorter flights and more affordable tickets, Europe is not only an accessible destination but also offers a refreshing escape from the Israeli summer. But did you know that beyond the enjoyable vacation, recent olim can also benefit from significant tax savings under Israel’s 10-year tax holiday?

Instead of the traditional summer camp for kids, consider renting an Airbnb in a popular European destination for a month. The post-COVID world has made remote work more accessible, allowing professionals to maintain productivity while enjoying a new environment and taking advantage of tax benefits.

This summer getaway can be both a delightful experience and a strategic financial move, maximizing your enjoyment while minimizing your tax burden.

BENEFITS OF SUMMER TRAVEL

Instead of sending your kids to an expensive summer camp, consider renting an Airbnb in a popular European destination for a month. This can be a cost-effective and enjoyable way to spend the summer. In places like Spain, Greece, or Portugal, you can find comfortable accommodations that cater to families, providing a home-like environment where everyone can relax and enjoy their vacation. This alternative can also contribute to significant tax savings under Israel’s 10-year tax exemption for recent Olim.

Working Remotely

The post-corona world has made remote work more accessible and acceptable. Many professionals can now work from anywhere with a stable internet connection. By choosing to vacation in Europe, you can continue working with minimal adjustment to your work hours due to the similar time zones. This flexibility allows you to maintain productivity while enjoying a refreshing scenery change. Moreover, the income you earn while working remotely in Europe can be considered “foreign earned income” for US taxes. With the proper planning, you can benefit from tax savings.

Tax Savings For Recent Olim

One of the most significant advantages for US citizens living in Israel who have made aliyah in the past 10 years is the potential for tax savings. Under Israel’s 10-year tax holiday, recent olim can claim their month spent working overseas as exempt from Israeli taxes. If you spend a month working remotely from Europe, that income can be excluded from Israeli taxation.

However, it’s important to note that this income is still considered “foreign earned income” for US tax purposes. While you can exclude this income under the Foreign Earned Income Exclusion (FEIE) for higher amounts, you can also take the Israeli taxes paid for the other eleven months as a credit against your US tax. This dual benefit allows you to maximize your tax savings while enjoying your time abroad. Leveraging the Israel 10-year tax exemption can significantly reduce your overall tax liability, making your summer vacation even more rewarding.

LEARN MORE

Planning your summer vacation in Europe can be a delightful experience and a strategic financial move. Take advantage of the tax benefits available as a recent Oleh and make the most of your time abroad.

What’s holding you back? Start planning your summer getaway and win the tax game!

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For more insights on navigating the complex world of dual citizen taxes, check out our U.S.-Israel Tax Treaty and Israel 10-Year Tax Exemption articles.