Bituah Leumi expert: Reporting unearned income

Vol LXVII: I am a dual Israeli-American citizen living in the US. If I return to Israel as a toshav hozer, will I be required to report unearned income, such as from pensions? Will I be asked about my sources of income?

October 27, 2008 11:07
Bituah Leumi expert: Reporting unearned income

bituah leumi 88. (photo credit: )


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IMPORTANT NOTE: Due to an internal technical error, all questions that were submitted during the months of late July and August have been erased. We apologize for the inconvenience and ask you to resubmit your questions. With apologies, Staff Sarah Gargi is director of the Publications Department in Research and Planning Administration at the head office of the National Insurance Institute, Jerusalem.

If you are interested in receiving a free copy of "Your Rights at the National Insurance Institute" (in English), offering a concise description of social security programs, definitions, conditions of entitlement, and rates of payment, please email your request; include your name and mailing address.
Click here to send us your questions for Sarah and please leave your comments on the Q&A below. NOTE: Sarah can only answer questions of a general nature. For specific cases, contact the Public Enquiries Dept. at, or call *6050. Make sure to supply your ID number. For general information see the NII web site most information is on the site in English as well.
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    * * * Vol LXVII Q: I am 31 years old. I have been living in Israel for 7 years, and officially made aliyah in March 2004. I have been receiving bituach leumi disability payments for health reasons. I'm currently preparing to moving back to the US (where I was born and raised, thus also a citizen) and I don't know whom to speak with concerning this in terms of the bituach leumi payments. I'm assuming that they will stop the payments if I'm no longer living in Israel, but whom can I speak with concerning this? Also if you have any other helpful information regarding leaving Israel I would be most grateful. A: You can try calling the national call center (*6050) or the Division of Public Inquiries (02-6709070 between 13.00 and 15.00) or the Tel Aviv branch (03-6250000 - ask to speak to the claims officer for disability). The claims officer has the guidelines to make a decision on whether or not to continue payments abroad. On principle, if you leave permanently to the US, there is no eligibility for continued payments, since there is no social security convention between Israel and the US. You can also find information on our site: Q: When my husband and I made aliya he had a job that did not work out and only worked 3 months. We received unemployment (paperwork with our absorption counselor) until March. In March he began a commission only position, paid from the US and has earned $8000 US this year, and that is probably all he will earn this year. I do not work. Are we entitled to any benefits? A: Only an unemployed person who has worked for a year and paid national insurance contributions is eligible for unemployment benefits from the National Insurance Institute. However, as a family you may be eligible for an income support benefit. You can find more information on conditions of entitlement to this benefit on our site: Q: Is a contract employee- one with his own "Asek Morsha"- that works at an an employer's office, alongside "regular", salaried employees entitled to vacation pay, travel and severance? A: This is not actually a question for the National Insurance Institute, but....yes, a contract employee is entitled to all these benefits, but not from the employer at whose office he physically works, but rather from the contracting company that employs him. Q: Please confirm that it is possible to continue to receive an old age BL pension from Israel if moving back to the USA. Q: My parents are 72 and 68 years old they are living in Israel for 17 years. During 15 years they were paying BL until they became pensioners. Now they made a decision to immigrate to USA. Would they be able to receive their pension? A: The National Insurance Institute of Israel has a "friendship treaty" (not Convention) with the US, under which a person who is already receiving an old-age pension here can continue receiving it in the US as well. A: Yes, the information was correct. A person who began receiving the old-age pension in Israel can continue receiving his pension in the US, under the friendship treaty between the two countries. Q: We made Aliyah in 2004. After one year in Israel, we returned to the Philippines for financial reasons. We are planning to return after a three-year absence. We cannot afford to pay the Health Insurance penalties of 2,960 NIS for 6 months my wife and I, though it would be refunded to us. My earnings are under this amount! I'm 70 and receive about $1,100 every three months as a Holocaust survivor from the Article 2 Fund in Frankfurt. We are willing to wait the six months (2 months per year of absence) before being eligible to receive our medical insurance for our family which includes 3 minor children, 7, 3 and 2. Here is my question, Sarah: WILL MY OLD-AGE PENSION BE REINSTATED UPON MY RETURN? If so we can wait the six months and hope to stay healthy while we await for the penalty time to expire. A: Regarding the health insurance penalties, it could be that the Ministry of Absorption would be able to assist you. Regarding the old-age pension, you apparently had received the special old-age benefit (because of your age at the time of your aliyah), which is dependent on an income test. When you return to Israel, you should report to your local NII branch and submit a new claim for this benefit. Your entitlement will be examined again on the basis of your income. Q: Shalom, I am a dual Israeli-American citizen living in the US. If I return to Israel as a toshav 'hozer, will I be required to report unearned income, such as from pensions? Will I be asked about my sources of income? Thanks, Moshe A: Yes, you will be required to report on all sources of income, including income from pensions. * * * Vol LXVI Q: After paying mas hachnasa [income tax] on unearned income from bank interest in the US, I received a bill from bituach leumi to pay an additional amount on the monies I reported to income tax authorities here in Israel. Is unearned income from the USA (ie, bank interest) subject to tax by bituach leumi? I thought only earned income was subject to charges by bituach leumi. Can you site the bituach leumi law that relates to unearned income? A: There are certain types of unearned income (such as income from rents) that are liable for national insurance contributions and certain types (such as bank interest) that are exempt from these contributions. All this is anchored in the National Insurance Law. More information can be found on our site: Q: What is the monthly bituach leumi payment for a full-time university student? Is there any discount on bituach leumi after aliyah? (I made aliyah in Sept. 2006 and have been a student since that time). A: New immigrants to Israel are exempt from payment of national insurance contributions for a year after their aliyah. After a year they pay contributions, like all Israelis, according to their status. Students have a discount; in fact, they pay the minimum amount: NIS 110 a month for national and health insurance contributions. You can find more information on our site: Q: I was receiving old age pension from Bituah Leumi from the year 2000. My husband was getting disability from 2005. We left to Canada to live next to our son. We notified the Bituah Leumi in writing informing them of our address in Canada. A month and a half ago I received from Bituah Leumi a letter stating that they know that I am living in Canada etc, and I will be receiving my old age pension all I have to do is to inform them once a year that I am still living there. My husband reached the age of 67 and was now cut off the disability income, which is very important to us. Why was it stopped and was not informed that he would have to fill in forms to get old age pension. Why wasn't the money continuing to be paid until being transferred to old age pension from disability. This income is very important to us. We need this money to live. A: From what I have been able to clarify, the payments were not ceased. Payments of the old-age pension (at the rate of the previous disability pension) are being made to your bank account in Israel, as of August. Q: My daughter and I made aliyah in 1981 when she was 8 years old. I had to leave Israel in 1997 to take care my old sick father. My daughter kid stayed in Israel, went to the army and married a Jewish man, Israeli born. We are Jewish as well from both sides of family. My daughter and I are Israeli citizens. Since then I have been twice to Israel to visit. I have an updated Israeli passport and wish to know if I eturned what my status concerning my pension and citizen rights would be. I paid bituah leumi for years when outside of Israel and in 2005 they told me I was out of their status as I lived abroad for too long and lost my citizen rights. I went to their office in Israel duting one of my visits and they told me that if I wish I could fight it in court. But I could not stay that long then to do so. Now I wish to go back as my dad passed away recently. I am 62 years old and have my family there - my child and grandchild. What are my rights as an Israeli? Will I get my pension still? And which status of aliya or other do I belong to and can I get back my bituah leumi? I paid for years and got returned one thousand and something dollars from them and they told me that I am not entitled to my pension or any citizen rights. A: You lost your Israeli residency status because of the lengthy period that you were abroad, but when you return to Israel you will be defined as a returning resident - and should report as soon as possible to your local National Insurance branch to confirm this status. You can fill out a residency form while still abroad, to save time (form 627 on our site: You can also pay in advance the special payment to redeem the waiting period for health insurance, by credit card, through the site. It is advisable to do this 6 months before you arrive in Israel, so that you will be entitled to health services upon arrival (contingent on your residency status being restored). Regarding the old-age pension, your entitlement will be examined when you return to Israel, taking into account the number of years that you paid insurance contributions, your age, family status and present income. Q: I am a Canadian living in Canada at the present time. Previously I lived and worked in Israel for more than 30 years and I retired about two years ago. I am getting my Old Age pension, however Bituach Leumi are inquiring about my living overseas. Will you be so kind helping me to understand what are my rights as retired person living outside of Israel. Thank you for your assistance. A: Benefit recipients who reside abroad are required to submit a certificate of life once a year to the National Insurance Institute, since the NII has no other way of ascertaining that they are living. This is not a special investigation, but rather standard procedure. Q: I made Aliyah on December 27th 1997. I have recently turned 61, and I would like to know if I decided to retire, what is the pensionable monthly amount paid? If I would like to work part time what is the maximum amount you are allowed to receive to still qualify for the pension. Thank you kindly for your response A: You reached retirement age (the conditional age of entitlement to old-age pension, depending on income) in September 2008 and may be eligible for the old-age pension from that month, if you have accumulated the required qualifying period. Between the retirement age and the absolute age of entitlement to pension - when one is entitlement to pension regardless of income - a person may still earn money and be entitled to a full or partial pension, depending on the amount he earns. This amount may be calculated for a single person or for a couple. If your husband has reached the age of entitlement to the old-age pension or has an income under NIS 4,368 a month - the income you may earn and still be entitled to pension is calculated for a couple. Otherwise, it is calculated for a single person. The amounts are: If under NIS 4,368 for a single person or NIS 5,824 for a couple - the full pension; if between NIS 4,368 and NIS NIS 6,188 for a single person or between NIS 5,824 and NIS 8,588 for a couple - a partial pension; if over these amounts - no pension. * * * Send your comments >> Cafe Oleh experts have been chosen for their knowledge and reputation. Cafe Oleh does not take responsibility for any advice they offer.
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