Many Israelis – including U.S. citizens, real estate investors, students, and individuals who have worked in the United States – may be entitled each year to significant tax refunds from the Internal Revenue Service (IRS). In many cases, these funds remain with the U.S. Treasury simply due to lack of awareness or concern about bureaucracy.
At Tax-Link, our U.S. and international tax department guides you through the process step by step. With a team that includes Israeli and U.S. Certified Public Accountants (CPAs) and Enrolled Agents authorized to represent taxpayers before the IRS, we help ensure that you make full use of your rights while avoiding double taxation.
Who Is Eligible for a U.S. Tax Refund?
U.S. tax refunds are not reserved only for businesspeople. Below are the most common cases in which we help our clients recover thousands of dollars:
Parents of U.S. Citizen Children (Child Tax Credit)
Even if you live and work in Israel, parents who are U.S. citizens are often eligible for an annual benefit from the IRS for each U.S. citizen child under the age of 17.
- Refund amount: The maximum credit is up to $2,200 per child in 2026, a significant portion of which is refundable, meaning a direct cash refund to your bank account even if your U.S. tax liability is zero.
- Eligibility requirement: To receive the cash refund, you must show earned income of at least $2,500 per year.
- High income threshold: This benefit is relevant for most families, as it begins to phase out only when the household’s annual income exceeds $400,000, or $200,000 for a single filer.
- Retroactive filing: Did you not file in previous years? You may file tax returns and claim the refund for up to 3 years prior.
U.S. Real Estate Investors: Refunds of Withholding Tax
Have you invested in U.S. real estate as a foreign citizen? It is likely that you paid withholding tax in amounts higher than required. Filing a tax return tailored for nonresident aliens, Form 1040NR, is the key to receiving a refund:
- Foreign Investment in Real Property Tax Act (FIRPTA) rules: When a property is sold, the law requires the buyer to withhold 15% of the total sale price, not just the gain. To recover this substantial difference, since the actual tax should generally apply only to the net gain, a tax return must be filed.
- Rental income: Many management companies automatically withhold 30% of gross rental income. We assist in classifying the income as effectively connected income (ECI) with a U.S. trade or business, which allows deduction of all ongoing expenses, such as depreciation, interest, management fees, and more. In many cases, this results in a refund of the tax withheld.
Students at Academic Institutions
U.S. citizens or U.S. tax residents who study at recognized academic institutions, including several leading universities in Israel, may be eligible for dedicated tax benefits:
- American Opportunity Tax Credit (AOTC): A credit of up to $2,500 per year for the first 4 years of undergraduate studies, of which up to $1,000 may be refundable in cash.
- Lifetime Learning Credit (LLC): A credit of up to $2,000 per year for advanced studies or professional courses, with no limit on the number of years.
Tax Refunds on Winnings, Gambling, and Prizes in the United States
Did you visit Las Vegas or participate in a competition in the United States and win? Nonresident aliens are subject to 30% withholding at source on winnings, reported on Form 1042-S. With proper tax planning and filing of Form 1040NR, it may sometimes be possible to offset gambling losses from the same tax year against the winnings and claim a significant refund of the tax withheld.
Employees Who Overpaid Tax in the United States
Did you work in the United States with an appropriate visa, such as L1 or H1B? In many cases, the federal or state tax withholding shown on your W-2 is higher than the amount you actually owe. Filing an annual tax return is the way to recover the excess tax withheld.
How Does the Refund Process Work at Tax-Link?
Dealing with the Internal Revenue Service (IRS) requires in-depth knowledge of tax law, the Israel-U.S. tax treaty, and strict compliance requirements.
- Eligibility review and initial assessment: We review your personal data – income types, citizenship status, and assets – in order to identify refund potential and verify that filing is worthwhile for you.
- Document collection and ITIN issuance: We help you gather the relevant forms. If you are not a U.S. citizen and need an Individual Taxpayer Identification Number (ITIN), we will handle the application process in an orderly manner.
- Careful preparation and filing of tax returns: Our expert team prepares the returns, Form 1040 for U.S. persons or Form 1040NR for nonresident aliens, while making optimal use of the law, and files them directly with the IRS securely.
- Follow-up until the money is received: We represent you fully before the authorities through a Power of Attorney, monitor the status of the process, and help ensure that the funds are transferred to you – by dollar-denominated check or direct deposit.
