Every self-employed person in Israel is required to submit a tax return to the tax authorities. The tax return can be prepared by you or by a tax advisor or accountant on your behalf. Careful and responsible editing of the tax returns and a careful record of the deductible recognized expenses can save you a lot of money and avoid unnecessary difficulties with the authorities.
Some facts about tax returns
The tax returns provide extensive information about the financial feature of the business and ultimately the annual tax rate of the business will be determined. In order for the tax rate to be accurate to the authentic economic conduct of the business, it is very important to pay attention to some details.
Don’t forget to take into account expenses that are partially recognized – telephone, travel, accommodation, car, meals for staff and various gifts are part of these expenses and can be deducted for some.
The revenue cycle must be consistent with what we reported to VAT that year.
In order to benefit from the credit points to which we are entitled, it is important to attach relevant references such as a retirement or pension allowance return, donations receipts, a divorce agreement, etc.
If we employ workers who live beyond the Green Line, make sure that the reported salary expenses are in line with those listed in the Employment Bureau.
Salary expenses must be accurately matched to those reported on Form 126.
The forms required when submitting a tax return
At the date of submission of a tax return, we will be required to complete a number of forms that are part of the return:
- An exempt practitioner is required to submit a declaration on his VAT revenue cycle. This is to ensure that his income has not exceeded the allowable threshold. If you pass the threshold, you will pay a tax on the relative difference.
- The return that will eventually be filled out by all taxpayers who submit a return during the year is a tax return for the self-employed / controlling shareholder. The tax return is also referred to as the Income Statement and includes the taxable income to be reported.
- Form 126 – Annual Information Return detailing deductions for income tax and Social Security from employees’ salaries.
- Form 856 – Annual Information return detailing payments to suppliers and indicating whether and how a tax on those payments has been deducted.
What should I report to receive deductions?
There are various cases that can be credited to us with different tax deductions.
- Donations are recognized.
- Provision for continuing education, provident or pension funds.
- Receipts on various recognized expenses such as office supplies or business travel.
- Non-working spouses or family members dealing with disability.
- Alimony payments.
- New immigrants.
The tax return is complex? CPA Guy Dovrat will arrange the mess for you
CPA Guy Dovrat runs his office in Yehud and has many years of experience in various taxation areas. All of this, in addition to his deep knowledge of complex issues in tax reporting, makes him a preferred service provider in the preparation of tax returns in particular and in accounting in general. For an efficient and high quality service that will save your business thousands of shekels a year, we will be happy to cooperate with you. We invite you to contact us with all accounting needs in your business.