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when the government owes YOU money

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legal warning

legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

If you worked more than one job in the past seven years then you are probably owed some money by the government and bituach leumi.

When you work more than one job, you are taxed at the highest income bracket, without any deductions for points. Instead, the government leaves it up to you to demand your money back.

Let’s say Bob, a single man, works two jobs and earns ₪ 5,000 at each one.  His gross pay would be ₪ 10,000 and he’d pay ₪ 4,600 (46%) in taxes.  Once Bob does a tax alignment, it would be clear that Bob should only have paid ~₪ 956.  As a result, the tax authority would pay ~₪ 3,644 to Bob. (click here for more information including form 116 for a tax alignment).

But what most people do not know if that there is also such a thing as an insurance alignment as well.  In Bob’s case, his employers took off 12% from his paycheck for his insurance.  Once Bob does his insurance alignment, he would find out that he deserves ~₪ 409 back for overpaid insurance (click here for the for more information including the forms for an insurance alignment).

As you can see, this is not a small amount of money.  In our simple case, Bob paid ₪ 5,800 in taxes on insurance on his paycheck when it should have been ₪ 1,748.  58%, when it should only have been 17%.

As I mentioned above, you need to start the process to get your money; no one is going to magically send you money.  Could we have an advanced system where this is done automatically?  Yes.  Should we?  Of course.  If you get a chance to meet anyone in the ministry of finance, tell them that this is much more important that setting price a price floor for children’s books.  In the mean time, you need to be active – no one cares about your money more than you.


7 Comments

  1. […] the frus­tra­tions of deal­ing the bureau­cracy in Israeli cus­tomer-ser­vice. Now, Jonathan Degani, a for­mer MBA class­mate and col­league of mine, pro­vides some sim­i­lar — and, […]

  2. […] 1 – The Israeli Tax Calculator – This tool allows you to check your paycheck and see that the correct taxes were deducted correctly.  If too much money is being taken out for taxes or insurance, then you should demand back your money through a tax alignment (תאום מס) or an insurance alignment (תאום ביטוח לאומי).  If you need to get money back through an alignment see this post for more details. […]

  3. 4daugters says:

    Thank you so much for this post. I did a Teum Mas last week but I had no idea that a Teum Bituach existed! I just made a claim for last year and will fill out a form requesting an alignment for 2012 as soon as I have my January figures.

    • galileegirl says:

      I just got a statement from Bituach Leumi. I will be receiving a 119 shekel refund to my bank account for overpayment in 2011! Thanks again for this valuable information.

  4. Mayah says:

    I made Alyiah in 1992 and lived and worked in Israel until 2002. Both my daughters served in the Army. My question is maintaining dual citizenship will I have any retirement from Israel for the 10 years I worked there and did not work in the US? Thanks!

    • jonnydegani says:

      if you paid into a keren pensia, then there is no reason you shouldn’t be able to claim your money when you reach retirement age.

  5. […] The Israeli Tax Calculator allows you to check your paycheck and see that the correct taxes were deducted correctly.  If too much money is being taken out for taxes or insurance, then you should demand back your money through a tax alignment (תאום מס) or an insurance alignment (תאום ביטוח לאומי).  If you need to get money back through an alignment see this post for more details. […]

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