Hebrew source: זיכוי במס הכנסה עבור ילד בדיור מחוץ לבית ההורים
From All Rights (Kol-Zchut) (www.kolzchut.org.il)
Parents of a disabled child/adult that pay for their child to live in outside housing are entitled to receive an income tax credit.
The credit is given only to parents who don't receive two tax credit points for the child.
For more information, see the Tax Breaks for Salaried Employees - Refund for Costs of an Institutionalized Family Member on the Tax Authority website.
A parent, that either he/she or his/her legal spouse, pays for their child to live in housing outside the home, is 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% (1/8) of income paid by the parent.
- Parents whose annual expenses on their child's housing are not more than 1/8 of their taxable income will not receive the credit on their costs. (In such a case, the parent could receive two income tax credit points for the child.)
- A parent 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,
- 12.5% of his income is 20,000 NIS (160,000 X 12.5%).
- The refund 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:
- 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) who knows the child.
- Form 116a - Request for Tax Credit due to a Disabled Family Member.
- A photocopy of the attachment (sefach) to the parent's identification card (teudat zehut) with the relevant child's information.
- 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.
- Those who are self-employed must fill out the section about personal refunds due to supporting an institutionalized family member on form 1301 (in their year end report and attach it to the rest of the documentation.
- The income tax credit request must be submitted every year.
- If the tax year has passed, the employee can submit an income tax return form to his local tax assessor office. One is able to relieve tax refunds retroactively for up to 6 years.
- Parents who have a child living in a framework outside the home may choose between receiving income tax credit points for a disabled person or the income tax credit for a child living in a framework outside of the house. In any event, parents can no receive both benefits, and it is therefore recommended to consult with an accountant in order to determine which benefit to request.
Laws and Regulations
- Income Tax Ordinance - Section 44
- Income Tax Regulations (Credit for a Disabled Individual and Credit for Expenses of Keeping a Relative in an Institution), 5756-1996 (on the Nevo website)
- Tax Return due to Costs of Hospitalization or Treatment of an Institutionalized Family Member on the Ministry of Health's "Kol HaBriut" website.