Thursday, August 03, 2006

Your tax dollars at work

This is something we have been aware of here at the consulate for a while. Basically, you don't have to pay taxes to get a refund, even if you have never lived in the U.S. If you live overseas, you can make up to $80,000 a year without paying U.S. taxes (except if you work for the government, in which case you pay taxes on every dime). The reason for this exemption is because the U.S. assumes you are paying taxes to the country you are living in, and in most cases, those taxes are substantially higher than those in the U.S. But the reality is that most use it as a means to pay no taxes at all.

So some enterprising attorney here ( has decided to make a living off of explaining to families here, especially the large religious families, how they can get the earned income tax credit for children without paying taxes. These are often duel Israeli-American nationals who were born here or moved here at a really young age. They in many cases never registered their children as American until they realized they could get the money. And once they realized it, they have been registering their children in droves.

It is not uncommon here, especially among the religious families, to have 12 or more children. The husbands get money here in the form of stipends to study at yeshiva and the wives often work. They get extra money from the government the more children they have. So now they are filing taxes in the U.S., claiming the overseas exemption, and getting a check from the U.S. for $1000 per child. And they have never paid taxes in the U.S., and often have never even lived there. They identify themselves as Israeli, and will tell you they just get American citizenship and a passport for their children so they can get the social security card (which they need for the refund).

Your tax dollars at work.

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