Income Tax Credit for a Child in Housing Outside the Home (Right)

From All Rights (Kol-Zchut) (www.kolzchut.org.il)

הקדמה:

Parents of a child or adult with special needs who pay for that person to live in housing outside the home are entitled to receive an income tax credit
For more information, see the Tax Authority website


  • The parent or legal spouse of someone who pays for their child to live in housing outside the home are entitled to receive an income tax credit.
  • The credit is equal to 35% of the difference between the amount paid for the child to live in the housing framework outside the home, and the obligatory 12.5% of income paid by the parent.
  • Parents whose annual expenses on their child's housing is not more than 1/8 of the income on their taxable income will not receive the credit. In such a case, the parent could receive two income tax credit points for the child.
Example:

Someone paid 60,000 NIS for his child to live in housing outside the home. The parent's taxable income is 160,000 NIS for that income tax year, so 12.5% of his income is 20,000 NIS (160,000 X 12.5%).

The deduction amount the parent will receive for paying for the child's housing:

35% X (60,000 - 20,000) = 14,000 NIS

Who is Eligible?

  • The credit is given to parents of a child or adult with special needs who provide funding towards having the child living in a housing framework outside the home (sheltered or institutional housing).
  • The credit is only given to parents who do not receive two income tax credit points for the child.

How to Claim It?

  • Those wanting to request a tax credit must contact the Tax Authority offices in their area. Click here to locate tax assessor offices according to location.
  • The following documents must be submitted with the request:
  1. Form 127 - Medical documentation that must include medical details and a clear and precise diagnosis in Hebrew, as well as indicate from which date the diagnosis is valid. The form must be filled out by a medical specialist (neurologist, developmental specialists, psychiatrist). The form may be downloaded here.
  2. Form 116a – Request for Tax Credit due to an Incapacitated Family Member - If the applicant is a salaried employee.
  3. A photocopy of the attachment (sefach) to the parent's identification card (teudat zehut) with the relevant child's information.
  4. Original invoices from the institution where the child resides or documentation from the social services office indicating the amount paid to have the child live in the housing framework.
  5. Form 106 - The employee's total payments and deductions for a specific tax year.
  6. Form 1301 - Income report (submitted at the end of the year).

Please Note

  • The income tax credit request must be submitted every year.
  • Parents for whom the tax credit is relevant may choose between receiving income tax credit points or the income tax credit explained here. In any event, parents may only receive one or the other, and it is therefore recommended to consult with an accountant in order to determined which benefit is more advantageous for the family.

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