Simple solutions Olim should know about

Last Updated on January 29, 2024

Navigating multiple financial systems effectively has always been a challenge to contend with for those of us who move to Israel. The good news is that innovation and competition are leading to simpler and more cost-effective solutions to some of the common money-management obstacles many of us Olim face. Advancements in financial technology are making our lives easier.

A few important points before jumping in:

1. Simple does not mean simple or best for everyone. Not all the the services outlined below are going to be right for you or your individual circumstances and you should research each platform before proceeding.
2. We are not affiliated with and do not receive any commissions or participate in any referral deals with the services we mention or link to anywhere on this site (besides our own services). Our goal is to build educational resources for Olim that are free from conflicts of interest.

While we have written about some of these services and platforms previously, this article will serve as a summary of some of the best options in each category. We will add new simple solutions to this list as they become available and receive positive reviews from other Olim using them.

Filing US taxes

US citizens, even after moving to Israel, are usually required to file a US tax return every year – reporting their worldwide income to the IRS. Because of the tax treaty, the foreign tax credit, and the foreign earned income exclusion, many individuals living in Israel don’t owe any US taxes when they file but can be entitled to significant refunds. Using simple filing solutions like TurboTax, which are not built to interpret Israeli documents (like the 106 form), often leads to reporting mistakes and confusion.

That’s where Simple Tax comes in. Simple Tax is a new service designed to make it easier and cheaper for Americans living in Israel to file their US taxes and their pricing certainly reflects that.  While an accountant still personally reviews every tax return, the system built by founders Aryeh Holtz and Elad Raviv, dramatically reduces the time they need to spend on each return – making the cost of filing via Simple Tax significantly cheaper than hiring a US accountant in Israel to file for you.

I have personally heard from many different Olim who were extremely satisfied with both the cost of the service and the individual attention they received.

Israeli tax reporting

It is very common and often advantageous for Olim (especially Americans) to maintain bank and investment accounts outside of Israel after making Aliyah. Luckily, Olim generally get an exemption for 10 years from their date of Aliyah, from reporting and paying taxes on any income generated in these non-Israeli accounts.

So… what happens after that 10 year tax holiday ends? Once the exemption ends, you are required to report even $1 of taxable income in foreign accounts directly to the Israeli tax authority in an annual report (דו”ח שנתי). Hiring an Israeli accountant to do this for you can be a significant extra annual expense and burden for Olim.

That’s where Alfie comes in. Alfie is basically a robo tax preparer – you upload all your documents and it files your tax report for you – for 275 NIS per year. It also has built in video guides at each step to help you find the specific forms you need. I personally reached out to their support over WhatsApp to ask a few questions – they were very responsive and helpful and they said that they expect to launch an English version of the site in the near future. For an additional 100 NIS, they offer a 1 hour zoom session where they will show you how to upload US tax documents in order to receive credit for what you paid in the US.

This service won’t help navigate complex tax challenges like working for a foreign company or maintaining a foreign business – but it can be very cost-effective for someone who is just looking to keep their savings and investments in accounts outside of Israel.

Transferring money & International Banking

Transferring money to Israel is one of the most talked about money topics amongst Olim. There are just so many different options (and many different complications) when it comes to efficiently transferring money and exchanging currency from one country to another. This is an especially difficult challenge for Olim who maintain significant savings or jobs outside of Israel after Aliyah and are looking to transfer money on a regular basis.

That’s where Revolut comes in. Revolut is basically a digital international bank that offers unlimited currency exchange at the market rate for a low monthly or annual fee. It connects to banks in many countries, makes it easy to save in shekels, and allows for up to 10 transfers a month to your Israeli bank at no additional fee. Lastly, it is the only non-Israeli debit card that allows you to actually spend in shekels – significantly reducing the amount you even need to transfer to Israeli bank.

See our article “How to use Revolut to save money before and after Aliyah” for more information on how to get started or read our full article ranking different currency exchange options to find the best service for you.

Banking in Israel

The Israeli banking system is very often a challenge for Olim. Fees are regularly hidden and difficult to understand. Many experience lousy customer service and complex bureaucracy for seemingly routine transactions.

That’s where One Zero comes in. One Zero is Israel’s first new bank in 43 years! They are offering clear and comprehensive pricing tracks which could significantly reduce banking costs and confusion for many. In addition to the free track, some of the features offered as part of their paid plans could significantly bring down banking fees commonly experience by Olim on things such as: currency exchange, foreign-currency accounts, foreign transfers and investment accounts. Lastly, they are now offering some the highest interest rates on the market on bank deposits (פיקדונות וחסכונות). Learn more about their different banking tracks, here.

When writing this article I was hesitant to include One Zero due to a major flaw. Simply put, because of the extra reporting requirements required for US citizens (FATCA), One Zero is not currently allowing Americans to open an account. Though they will likely start allowing US citizens to join in early 2023, there are rumors that US citizens will not be eligible for the free track. This is obviously a very frustrating point for many American readers of this blog who are sick of both aggressive US international reporting requirements and being discriminated against by Israeli banks because of them.

Regardless of whether or not you are currently eligible to open an account, I think most of us Olim can agree that more competition in Israel’s banking system is a very good thing. There will likely be some “growing pains” involved as this new bank expands its offering but count me in as cautiously optimistic.

Israeli credit cards

Why are there fees for everything in Israel?? Many Olim are surprised to find that it is actually common in Israel to pay monthly fees for a credit/debit card that gives you little to no rewards when you use it. This may be slightly irritating if you are from one of the many countries where credit cards with annual fees earn you significant cash back and points on every purchase.

While it is common for Olim to continue to use their no foreign fee credit cards after Aliyah, many find that using an Israeli credit card is necessary or more convenient for some types of transactions here (Filling up gas, paying arnona, setting up a Horat Keva, etc.). There are plenty of people who are able to negotiate away monthly credit card fees in an annual call with their bank but many would prefer to avoid having to haggle with their banks each year.

That’s where the Max I Need It (כזה אני רוצה) card comes in. The I Need It card doesn’t offer any very exciting rewards but it has no annual or monthly membership fees (דמי כרטיס) which makes it a simple solution for someone who just wants an Israeli card without fees (and isn’t eligible for or interested in opening a One Zero account mentioned above). In addition, if you need to use the card occasionally outside of Israel, its 1% fee on foreign transactions is currently one of lowest available in Israel.

Investment accounts

Investing is a key element of successful financial planning and often tricky for Olim to navigate – especially for those who make Aliyah with US citizenship. There are a lot of different complexities when investing from Israel (covered inside and out in our guided investment program) – but some of the more common questions Olim have when searching for an investment platform, include: What account should I use to invest after I make Aliyah? What should I do with existing brokerage and IRA accounts after I make Aliyah and no longer have a US address? How do I invest the funds I earn into my Israeli bank account? How do I transfer funds from US brokerage account to my Israel bank account? How do I avoid the high commissions of Israeli brokerages?

That’s where Interactive Brokers comes in. Interactive Brokers is a global investment platform (brokerage) based in the US. What makes Interactive Brokers unique is that it is the only US based brokerage that offers easy and cost-effective access to the Israeli banking systems. In a real nutshell – this means that it is relatively simple to transfer money to and from your Interactive Brokers account via both a US and Israeli bank account. Once funded, your IBKR account can be used to purchase shares on US and global markets with much lower commissions than Israeli brokerage accounts.

You can also open an account using your Israeli address alone and can transfer existing IRAs and brokerage accounts directly to Interactive Brokers – for direct access to all your investments in Israel. It’s easy-to-use transfer system and extremely low-cost currency conversion make it a suitable hub for your cross-border financial system, both before and long after making Aliyah.

It’s worth noting that getting started with Interactive Brokers isn’t always simple and many Olim find the process of opening an account to be a bit intimidating – see our full FAQ article to help with some of the most commonly asked questions.

Summary

New technology, apps, and services are making it much easier for Olim to navigate a smoother financial transition to Israel. Here at Blue & White Finance, our goal is to continue to discover and research technology and services that are making Olim’s financial lives easier in Israel – and share it with as many people as possible! Be the first to receive our latest posts by joining our mailing list (No spam – new content only!).