U.S. Citizens and Green Card Holders
Are you a U.S. citizen or a Green Card holder in the U.S.?
No worries-there are bigger problems, but these are the things you will most likely be required to deal with.
U.S. citizens and Green Card holders are generally required to file U.S. tax returns even if their center of life is in Israel, and sometimes to file separate reports regarding accounts and assets held outside the U.S.
On this page, we have briefly compiled the common forms and reporting obligations, filing deadlines, and what you should prepare in advance-so you can understand what it involves and move forward in an organized way.
Reports and Forms
1040 - The U.S. Annual Tax Return
1040 - The U.S. Annual Tax Return
The annual return for individuals (U.S. Individual Income Tax Return)
In brief: The primary return in which U.S. citizens and Green Card holders report worldwide income, deductions, and credits. This requirement applies even if you live outside the U.S., including in Israel.
What it includes: Employment income, business or self-employment income, rental income, capital gains, and investments, as well as foreign assets/accounts through the relevant schedules and forms.
When to file: By April 15 of the following year. Taxpayers living outside the U.S. receive an automatic extension to June 15, and in certain cases up to October 15. It is recommended to pay any tax due by the original deadline to avoid interest and penalties.
What to prepare in advance: Income forms, brokerage/investment account statements, rental income and expense details, foreign tax payments, and foreign account information.
FBAR (FinCEN Form 114)
FBAR (FinCEN Form 114)
Report of Foreign Financial Accounts
In brief: A separate filing from the annual tax return, submitted to FinCEN (not the IRS). It is required for U.S. citizens or Green Card holders who have foreign financial accounts with an aggregate value of more than $10,000 across all non-U.S. financial accounts combined.
What it includes: Details of bank accounts, brokerage accounts, deposits, and signature authority, including the maximum account balance during the year and the name of the financial institution.
When to file: By April 15 of the following year, with an automatic extension to October 15. Failure to file can lead to significant penalties, so it is important to prepare in advance.
What to prepare in advance: A consolidated list of all financial accounts held outside the U.S., including the bank/broker name, account number and type, and the maximum balance during the year. It is recommended to keep (and, where relevant, attach) bank statements and annual summaries for verification.
FATCA (Form 8938)
FATCA (Form 8938)
Statement of Specified Foreign Financial Assets (attached to Form 1040)
In brief: A form filed with the IRS to report foreign financial assets above the statutory thresholds (which vary based on residency and filing status. For taxpayers living abroad, the thresholds are generally higher, but you may still be required to file in addition to the FBAR).
What it includes: Asset types, year-end values/maximum values, related income, and details of the relevant institutions/assets.
When to file: Filed together with your U.S. annual tax return (Form 1040).
What to prepare in advance: A consolidated list of foreign financial assets with year-end values and the highest value during the year, including bank/brokerage accounts, foreign securities/funds, and similar assets.
PFIC (Form 8621)
PFIC (Form 8621)
Reporting and tax calculation for passive foreign investments (PFIC)
In brief: A form used to report a Passive Foreign Investment Company (PFIC) - a non-U.S. entity (most commonly a mutual fund or investment fund) where most of its income or assets are passive (such as interest, dividends, or capital gains). The requirement generally applies to each relevant holding, even if you did not sell.
What it includes: Selecting the applicable tax treatment for the foreign entity, calculating income and distributions, and reporting cost basis. If no proper election is made, additional tax and interest may apply.
When to file: Filed together with your U.S. annual tax return (Form 1040).
What to prepare in advance: It is recommended to gather statements, purchase/sale history, and supporting documentation for distributions.
CFC (Form 5471)
CFC (Form 5471)
Reporting for foreign corporations controlled by U.S. shareholders (Controlled Foreign Corporation)
In brief: A foreign corporation in which more than 50% of the rights (by vote or value) are held by “U.S. Shareholders” - U.S. citizens or Green Card holders who own at least 10% of the company. Such shareholders are required to file an annual report with the IRS regarding the company’s activities, even if no profits were actually distributed.
What it includes: Ownership structure details, financial statements, related-party transactions, equity movements, and income that may be subject to U.S. tax (Subpart F / GILTI).
When to file: Filed together with your U.S. annual tax return (Form 1040).
What to prepare in advance: The company’s financial statements, a shareholder list, details of intercompany transactions, and a history of distributions or undistributed earnings.
Didn’t report income to the IRS in prior years? Easily get back into compliance through the Streamlined procedure
The Streamlined procedure is designed for U.S. citizens and Green Card holders who, in good faith, previously failed to report foreign income or foreign accounts. Through this procedure, you can resolve your IRS filing obligations in a consolidated manner and without criminal penalties – and in some cases, without civil penalties as well. The procedure generally involves filing 3 years of federal tax returns (Form 1040) and 6 years of FBARs (foreign account reports), together with a “Non-Willful Certification” stating that the failure to file was not intentional.
To qualify, the taxpayer must demonstrate that the noncompliance was non-willful and that they meet the applicable residency requirements for the track selected – Streamlined Foreign Offshore (for non-U.S. residents) or Streamlined Domestic Offshore (for U.S. residents). Under the foreign-resident track, U.S. citizens living abroad may sometimes pay the tax liability with no penalties at all, while U.S. residents typically resolve past filings with a one-time miscellaneous penalty.
At Tax Link, we support you at every stage of the process – from eligibility review and choosing the right track, through data collection and preparing the returns for the relevant tax years, to an orderly submission to the IRS and follow-up through final confirmation. The service also includes full coordination with your Israeli filings to ensure any gaps are fully closed in both countries and to help prevent double taxation. See also: Israel’s voluntary disclosure procedure for prior-year reporting, recently published by the Israel Tax Authority.
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Articles and Guides
Voluntary Disclosure in the US (Streamlined Procedure)
Voluntary disclosure is a framework established by the U.S. Internal Revenue Service
U.S. Filing Obligations for Green Card Holders
Pursuant to U.S. tax residency policy as outlined by the
FAQ
Does a U.S. citizen or Green Card holder need to file in the U.S.?
Yes. Every U.S. citizen and Green Card holder has an annual filing obligation with the U.S. tax authorities (the IRS).
What filings does a U.S. citizen or Green Card holder need to submit in the U.S.?
A U.S. citizen or Green Card holder is required to file an annual return with the IRS (using Form 1040), and may also be required to file an FBAR (generally, if they have foreign accounts with an aggregate balance of $10,000) and a FATCA report for specified foreign financial assets (if the applicable criteria are met).
Does a U.S. citizen also need to file a tax return in Israel?
Not necessarily. A U.S. filing obligation does not, by itself, create an Israeli filing obligation, and the Israeli filing requirement depends on your circumstances.
What is required to file a U.S. tax return?
To file in the U.S., you need a U.S. taxpayer identification number. For U.S. citizens or Green Card holders, this is usually an SSN (Social Security Number). An ITIN (Individual Taxpayer Identification Number) is used by individuals who do not have an SSN (typically non-U.S. citizens), and an EIN (Employer Identification Number) is used for business owners/entities (such as corporations, partnerships, and similar).
What is FATCA and who is required to file it?
A FATCA report (Foreign Account Tax Compliance Act), filed on Form 8938, is submitted by U.S. citizens or Green Card holders who have financial assets outside the U.S., if they meet the thresholds set under U.S. law.
What is an FBAR and who is required to file it?
An FBAR (Report of Foreign Bank and Financial Accounts), filed as FinCEN Form 114, is submitted by U.S. citizens or Green Card holders who hold foreign financial accounts with an aggregate value of $10,000 or more. The FBAR is filed with FinCEN (the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury), not with the IRS.
What is the difference between FATCA and FBAR?
FATCA and FBAR are two separate filings that may be required for U.S. citizens and Green Card holders. The FBAR filing requirement applies when you have foreign financial accounts with an aggregate value of $10,000 or more, while FATCA reporting is required for specified foreign financial assets if you meet the thresholds set under U.S. law. In addition, the FBAR is filed with FinCEN (a financial enforcement bureau within the U.S. Department of the Treasury), whereas FATCA (Form 8938) is filed with the IRS as part of your tax return.
Do the taxes I pay in Israel reduce my U.S. tax liability?
Yes. U.S. citizens and Green Card holders are taxed on their worldwide income; however, taxes paid in your country of residence (Israel) can reduce your U.S. tax liability. Alternatively, employment income up to a certain amount may be excluded from U.S. taxation.
Are there penalties for not filing U.S. returns?
Yes. Failure to file U.S. returns and failure to pay U.S. tax can result in penalties and interest being added to the amount due. Whether a penalty will apply depends on various factors, including whether any tax is actually owed, how long the filing is delinquent, and which filings were missed (the entire return or specific forms/schedules), among other factors.
Can I file with the IRS retroactively if I didn’t file on time?
Yes. In cases of non-willful noncompliance, you may be able to catch up through the U.S. voluntary disclosure procedure known as the Streamlined program, which in some cases can also reduce penalties for late filing and payment. The U.S. Streamlined program generally includes filing Form 1040 for the last 3 tax years and FBARs for the last 6 years.
Does a U.S. citizen or Green Card holder need to report an Israeli Keren Hishtalmut, Kupat Gemel, or pension fund in the U.S.?
Generally, yes. An Israeli Keren Hishtalmut, Kupat Gemel, or pension fund is typically treated as a foreign financial account, so in many cases it must be reported as part of FATCA (Form 8938) and/or FBAR reporting, as applicable.
Why Choose Tax-Link?
One Stop Shop – US and Israeli tax reporting under one roof – no back-and-forth coordination between an Israeli CPA and a US CPA. End-to-end handling, all in one firm.
A personal approach – High-level professionalism alongside clear, pleasant communication. You always know exactly where things stand.
A clear process with minimal involvement on your part – Smart document collection, an organized workflow, and full end-to-end process management by our team.
Transparency and Fair Pricing – Real-time status updates, clear deadlines, and no surprises.