[RBS] Fw: IRS Email Tax Law Assistance

Tue Apr 24 15:15:53 IDT 2012

seems like my post created some interest.
basically, 
 the us-israel tax treaty excludes taxation of ss benefits by the us or israel, for residents of aretz. 
the teaty specifically includes olim.
my question was: do i need to file form 8833 to use the treaty?
irs says no and lists several exceptions obviating the need for the form.
for your convenience, i've enclosed the actual message. 
monsey>rbsa dec '10 
----- Forwarded Message -----
From: "TaxHelp at hal1.ausc.irs.gov" <TaxHelp at hal1.ausc.irs.gov>
To: compubear_613 at yahoo.com 
Sent: Friday, April 20, 2012 11:17 AM
Subject: IRS Email Tax Law Assistance

NOTE: Thank you for your inquiry.  Our response to your tax law question appears below. I hope this information has been helpful.  If you have a follow-up question or another general tax law question, please return to our web site at: www.irs.gov. 

Please do not use your "reply" button to respond to this message.  More helpful information is provided at the end of this message.

Your Question Was:
I retired and moved to Israel in December, 2010, and am a bonafide resident of Israel. I understand that the tax treaty removes the social security payments I started to receive in 2011 from taxable income, and I need to file  IRS Form 8833
I am also retired from the US Army and receive a pension.
My question is: Does my military retirement pension fall in  the category of  public pension , which the treaty exempts from taxation?
Thank you for your help and clarification.

The Answer To Your Question Is:
Thank you for your inquiry dated April 16, 2012.  We apologize for the delay in our response.  Based on the information you provided, we are making the assumption that you are a U.S. citizen residing in Israel, receiving U.S. social security benefits.  You are correct in understanding that your U.S. social security benefits would be tax exempt in the U.S. when you are a resident of Israel.  However, you are not required to report your exempt social security benefits on a Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).  You can refer to our website at www.irs.gov for a list of “exceptions” for filing the Form 8833.   You can simply type “Claiming Tax Treaty Benefits”, in the search engine box on our homepage, and click on the first link that appears.

As for your military retirement pension from the U.S. Army (...and thank you for serving our country), your pension would not be exempt from U.S. taxation.  You should report your pension income on line 16a and 16b of Form 1040, U.S. Individual Income Tax Return, or on line 12a and 12b of Form 1040-A, U.S. Individual Income Tax Return, which ever applies.  

The treaty Article 22, Government Functions and treaty Article 6, General Rules of Taxation, with respect to the “saving clause”, implies that when you are a U.S. citizen, the U.S. reserves the right to tax you on this pension income, however, if you were to become an Israeli citizen (creating a dual citizenship), the treaty would generally imply that you would be exempt from tax on this pension in Israel.  

If you are subject to pay tax in both Israel and the United States on the same income, you may be entitled to a foreign tax credit or deduction on your Israeli tax return to avoid double taxation.  You should contact the Israeli taxing authorities for more information on claiming a foreign tax credit or deduction in Israel, if applicable.  

Based on the information you have supplied, we have attempted to answer your question(s); but you should know that my answer does not constitute an official ruling by the Internal Revenue Service (IRS), and it should not be used as such.   If you want an official ruling by the IRS, you should follow the instructions provided in Revenue Procedure 2012-1, which is available at most IRS offices and in some libraries.  However, Revenue Procedure 2012-7 states that the IRS will not, in many cases, issue advance rulings concerning the interpretation of tax treaties.

When you are a U.S. citizen or resident alien, you can request assistance from the U.S. competent authority if you think that the actions of the United States, a treaty country, or both, cause or will cause a tax situation not intended by the treaty between the two countries.  You may refer to Publication 54, page 34 for more information on Competent Authority Assistance

We hope this information helps to address your concern.  You may view and download publications, forms and instructions from our website at: www.irs.gov.  You may call us from outside the United States, at 267-941-1000 (toll call), Monday through Friday between the hours of 6:00 am and 11:00 pm, Eastern Time. If you are calling from within the United States, you may call our toll free line at 1-800-829-1040 between the hours of 7:00 am and 7:00 pm, your local time (Alaska & Hawaii follow Pacific Time). Thank you for using this service.

IRS forms and publications may be accessed on our web site at the following address: www.irs.gov or ordered through our toll-free forms line at: 800-829-3676
Expect delivery within 10 business days.

Other useful toll-free numbers include:
800-829-1040 IRS Tax Help Line for Individuals
800-829-4933 Business and Specialty Tax Help Line
800-829-1954 Refund Hotline
866-562-5227 Disaster Relief Toll-Free Number, Monday 
through Friday, 7 am to 7:00 pm local time

We are interested in your opinion and providing the best possible service to you. Please take a moment to answer our survey at: http://www.irs.gov/help/page/0,,id=13155,00.html

This answer is based on our understanding of the facts you presented in your question.  Omission of facts may affect the answer given.  

Here's a tip for navigating the IRS web site. Use the "search" button at the right side of the web page.  Enter key words or phrases for your topic in the entry box.  

For security reasons and to protect taxpayer privacy, the IRS does not address taxpayer account-related issues for which personal, identifying information would be needed through e-mail. 

Our basic Electronic Tax Law Assistance service is designed to assist the general public in complying with their Federal tax obligations by helping them with questions they have about the tax law and procedural issues. Our goal is to provide complete and accurate responses to as many taxpayers as possible. 

If you have additional questions, you may contact us either by phone at 1-800-829-1040 or by email through our web site www.irs.gov.

EMPLOYEE ID: 1000147358    Ms. Bond    Tel.:English--(267) 941-1000    Spanish--(800)-829-1040    msg#: 1878312
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