Donations tax returns
Did you know? Freelancers and employees can get an up to 35% tax return on donations to the Jerusalem Music Centre.
LLCs can get a refund and tax return for 23% of the amount donated to the Jerusalem Music Centre.
This way, you both give to an excellent cause and get money back from Israel’s IRS (מס הכנסה)!
According to article 46 of the Internal Revenue Act, each person who donated an annual amount higher than 190 NIS (updated to 2020) to a recognized tax-exempt institution, is entitled to a reduced tax in that year, in the amount of up to 35% of the sum of the donation.
For example, a person who donated 1000 NIS to the Jerusalem Music Centre (a recognized nonprofit according to article 46) will be entitled to a tax return of 350 NIS that year. Additionally, LLCs that donate are entitled to a tax return in the sum of that year’s company tax. This way, an LLC which donated 10,000 NIS during 2020, will receive a tax return of 23% (the company tax for the year 2020), meaning 2300 NIS.
The Jerusalem Music Centre donation certificate according to article 46
The 2020 tax year is coming to a close, and many employees are looking to show tax receipts and receive tax returns.
Who is eligible for a tax return?
Every employee and freelancer who donated to a nonprofit organization recognized according to article 46 during the 2020 tax year.
The minimal annual amount for tax return eligibility is 190 NIS or above.
How much money can you get as a tax return?
the return is for 35% of the amount donated, for example:
f you gave 1000 NIS to the Jerusalem Music Centre, you can receive a tax return for 350 NIS!
Can employees (contract workers) also get tax returns on their donations? Definitely!
Every employee as well as every freelancer who donated to a recognised nonprofit or charity is entitled to tax returns. To view the Jerusalem Music Centre’s tax deduction documentation press here
So how does it work? How do you get tax returns for your donations? If you hurry and submit your tax return requests before the end of the current tax year, you can get your tax returns directly through your paycheck.
In order to receive tax returns as employees you have to submit 3 documents:
- A paycheck from your employer. In case you are employed at multiple workplaces, you need to submit a paycheck from each of your employers.
- Original signed receipts for your donations. The receipts need to be in the name of the person asking for the tax return, or in the name of a registered spouse. It is possible to submit digitally signed receipts.
- Form 116 - form asking for tax discounts. See here - Form 116
The documents must be submitted at the tax authority offices in your city of residence. Here you can find a list of addresses and business hours for the tax authority office in your city of residence: Internal Revenue / Tax Authorities / Business Hours Internal Revenue / Tax Authorities / Business Hours
The tax agent will give you a certificate meant for your employer in the amount to be returned.
How do you fill form 116 for tax returns?
The form is simple but if you’re having trouble with it or hate bureaucracy you can ask for help from the accountant at your place of work. Here’s a brief explanation of how to fill in the form: Form 116, section A’.
In this section you have to fill in your personal details. Name, address, date of birth, marital status and ID number. Form 116, section B’.
In this section you have to fill in the details of your partner / spouse. It’s important to mention that income from welfare and benefits only counts if it is taxable. Form 116, section C
In this section you have to input the names and dates of birth of all children who will be under 18 by the end of this tax year. Form 116, section D
In this section you have to input all your taxable income. In the first line you must write down the details of your main employer - the main salary which you receive. The number of your employer’s deductions portfolio appears on the top left corner of your paycheck. You should fill in the gross income, meaning the amount earned before paying national insurance, pension funds etc. The gross amount appears on your paycheck in the topmost “total” line. If you receive a constant monthly salary, you can fill in the sum in the “monthly income” column. If the salary varies month to month, you can calculate the estimated annual income and input it into the “estimated annual income” column. If there are any changes to your income before the end of the tax year, you can resubmit the request later. Form 116, section E
You have to checkmark the box in the 4th row which begins with the words “I have donated to recognized public charities” and write the total amount of receipts for donations which you donated during the current tax year. Don’t forget to sign the form.
That’s it, we’re done 😊
You've now donated to an imporatn cause, helped promote outstanding youn msicians in Israel and can get tax returns