Sunday, October 21, 2007

With Liberty and Passports for all.

Here in Israel we have an expression, "you just discovered America" -- which the Israeli way of letting someone know that they just realized the obvious.

The Wall Street Journal just "discovered America" as well.

Their method: Report that something widely-known is really "obscure".
A swelling number of Israelis are flying to the U.S., armed with tattered U.S. high school diplomas and faded marriage certificates, to try to tap into an obscure clause in U.S. immigration law that enables some grandparents to pass citizenship to their grandchildren.
Go to any neighborhood in Israel where there are more than two immigrants from America, and ask them how does a child born in Israel to American parents, obtain US citizenship.
"I am not quite sure how this group of people caught onto this section of law, but they all seem to know about it," says Michelle Tolbert, an officer in the Chicago branch of the U.S. Citizenship and Immigration Services, the agency that processes applications.
How would they have "caught onto this obscure section of law?" For the totally clueless who aren't "in the know", there's the top-secret US Embassy in Tel-Aviv's web site, which states the law very clearly.

First you click on the section "US Citizen Services", from there to click on the "obscure" section entitled:
The following information will assist you in determining whether or not your child is a U.S. citizen and will provide assistance in the steps you are required to take to register the birth.

To determine if the child’s U.S. citizen parent(s) were in the U.S. long enough to transmit citizenship, please follow this link.
After reading the simple instructions in English, the web page states:
If you are unable to confer citizenship to your child, your parents may be able to apply for expedited naturalization for your child if they are both American citizens. See here.
In easy to read block letters, the information is available to anyone who is capable of using a mouse and reading English:
IF YOU AND THE CHILD ARE RESIDING ABROAD, THE CHILD MAY BE ELIGIBLE FOR EXPEDITIOUS NATURALIZATION IF YOUR PARENT, THE CHILD'S U.S. CITIZEN GRANDPARENT, WAS PHYSICALLY PRESENT IN THE UNITED STATES FOR A PERIOD TOTALING 5 YEARS, 2 AFTER THE AGE OF 14. THE GRANDPARENT CAN BE LIVING OR DECEASED AT THE TIME OF THE APPLICATION. IF DECEASED, THE GRANDPARENT MUST HAVE BEEN A CITIZEN PRIOR TO THE CHILD'S BIRTH AND AT THE TIME OF THE GRANDPARENT'S DEATH.
Yet the Wall Street Journal spins the story as follows:

In the first nine months of the 2006-2007 fiscal year, which began Oct. 1, 2006, the U.S. immigration agency processed nearly 4,000 applications for citizenship through grandparents, compared with about 2,000 for all of fiscal 2003-2004. Parents of any nationality can avail themselves of the law, but Israelis comprise 90% of those taking advantage of it, Ms. Tolbert estimates.

Even more interesting is the reasons given for applying for citizenship:

  • Some of those Israelis are seeking to give their descendants a safe haven from Mideast strife. "The world keeps changing," says Amy Katz, who recently flew to Chicago with her toddler and 3-month-old daughters to secure U.S. citizenship for them. "There could be a horrible war. There could be no Israel one day."
  • "This gives my daughters more options in life," says Amy Katz, who says her U.S. passport enabled her to see Jordan before Israelis could travel there. "They may want to study in the States."
  • "Everybody who can is applying," says his mother, Yecheved Robin. "It's like the Roman Empire and citizenship. Everybody would like to be a citizen of the United States if they can."
No, those aren't the major reasons why people apply for US citizenship for their children. I'm not worried about war. I would prefer if my kids studied here in Israel (far cheaper here as well).

The real reasons are very simple.

1. Ease of travel to the US instead of waiting for a VISA as an Israeli.
2. US citizens must file with the IRS annually. If you follow the law and file with the IRS, there's a possible benefit for you. The "Jewish Worker" blog wrote this up 2 years ago (it's not obscure either).
A number of years ago, the US introduced a refundable child tax credit which started at $600 a child and is now $1000 a child. American citizens who live, work, and pay taxes in Israel, report their Israeli income to the IRS, but, because taxes are higher in Israel then in the US the taxes paid in Israel more then offset any tax that would be owed to the US government (by treaty there is no double taxation).
Using the "Alternative Minimum Tax" one could end up owing no taxes to the US government at all, and because the tax paid in Israel offsets the tax that would have been due in the US, one could end up receiving a refund of up to $1000 per child.

There are many reputable tax accountants in Israel that can help you with this process.

My advice; make sure they are reputable and sign the return (that they filled out for you) -- that's the easiest way to ensure they take responsibility for the filing.

If you want more info, drop me an email.




Wherever I am, my blog turns towards Eretz Yisrael

17 comments:

Safranit said...

I think (as the wife of an Accountant) that the tax law is the biggest reason people do this.

But the interesting part is that most accountants in the US know nothing about the tax refund, because it is aimed at poor Americans who wouldn't tend to use accountants.

Jameel @ The Muqata said...

Safranit: You are 100% correct. Funny how the WSJ is clueless ;-)

Fern said...

That's great. America is basically handing out welfare checks to children who have never even been to the U.S. because their parents know how to work our tax code? Niice.

Fern said...

Oh, and while this whole thing is pretty obvious in Israel, I'm pretty sure there would be outrage in the U.S. if it was widely known.

Renegade said...

so that's why the IRS has been giving me more in my refund then I've been paying...

I'm pretty sure any frum accountant knows about these credits...

Jack's Shack said...

Work for an Israeli company in the US and you'll see just how fast information is shared.

I imagine that expats all over the world do this sort of thing within their own communities.

elchonon said...

Fern,
Are you nuts.. you should see the welfare recipients in the US... If your a crack addict you qualify to get welfare!

Anonymous said...

yeah milk uncle sam dry...am yisrael chai...thankless bastards

-jewby doo

Jameel @ The Muqata said...

Jewby Doo:

These laws are passed for reasons;
anyone can go to the Library of Congress (or other depository libs.) if they're so interested in knowing why and how.

Legislators hope to accomplish whatever goals their constituents had in mind.

It is only "working/abusing the system" if false claims are made.

bluke said...

All the English religious newspapers in Israel have lots of ads for accountants that do this.

bluke said...

Fern,

This is not working the tax code, this is simply an unintended consequence of the convoluted US tax code. This is something that I do with Turbo Tax. every tax break has it's unintended recipients. The way to get rid of this is to drastically simplify the US tax code and get rid of all the ridiculous tax credits, etc.

bluke said...

Interestingly enough my cousin (born in Israel to American parents) is going through this process for his kids right now.

Fern said...

I never suggested anyone was doing something illegal. I only suggested that it is WRONG for the American government to give money to people who have no connection to the United States (other than a parent or grandparent who decided to LEAVE). The fact that Americans take advantage of stupid American laws is no excuse for Israelis to do it, and quite frankly, if that's the best reason in support of Israelis getting a thousand bucks per kid then you really should rethink the ethics of what Israelis are doing. American crack addicts are on welfare, so why not Israelis? PLEASE. Spare me.

Anonymous said...

"Everybody would like to be a citizen of the United States if they can."

Not me. I made aliyah in 1996 and renounced my American citizenship in 1997. I don't believe one can be loyal to two different countries. At some point their interests diverge and you have to choose. Well, I made my choice, for better or worse. Oh, and I haven't been out of the country since, but if I'm forced to travel I do have an Israeli passport. I'll wait to see Jordan after we get it back. ;-)

Former American

Mr Bagel said...

Actually on an historical basis, I can fully understand the basis for having dual citizenship.

The sad fact is many died during the Shoah due to not having travel documents allowing them to leave. Having access to non Israeli travel documents is just being smart in this time of the global community and the increasing rise of antisemitism.

As for the morality of getting the rebate, I would think some might want to be just a little bit more informed before they start making sweeping statements. I'm sure every situation is different.

But then that might stop some from exercising their 'rights' to self righteous indignation?

Was it not US citizens living in Israel 'taking advantage' of a law that other 'Americans' take advantage of? Do they suddenly become lesser US citizens due to residing in Israel or having dual documents?

Or Fern are you simply conveying your personally held belief that: "people who have no connection to the United States (other than a parent or grandparent who decided to LEAVE)" ...aren't really AMERICAN?

Mr Bagel

Anonymous said...

This blog is not answering the point made in the WSJ, and in fact makes it even more mysterious: okay, so it isn't a secret. That doesn't explain why almost the only people doing it are Israelis. And, I also think is disgusting that people who live out of the US are taking a tax credit intended for poor Americans.

Anonymous said...

"And, I also think is disgusting that people who live out of the US are taking a tax credit intended for poor Americans."

Can someone explain when abiding by a U.S. law became disgusting? I assume you hand over all of your tax refunds directly to the nearest poor person you find, so as to offset this obviously "disgusting" behavior of those pseudo American Israelis?

I mean, you did the calculations and you're so smart. Obviously Uncle Sam made a mistake, so the only ethical thing to do would be to give the refund to a charity or right back to the IRS. MAKE them take it back. It's the only moral thing to do.

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