REPORTING TAXES IN ISRAEL ON TRADING WITH NON-ISRAEL BROKER (Firstrade for example)
– 1042-S tax form, provided by US broker, contains info ONLY about dividend-related taxes, that were withheld by US IRS
– ACTION REQUIRED: Tax on profits from sales of stocks is NOT charged by a US broker and is not reported to the IRS. Hence such tax is supposed to be (and MUST be) paid PROACTIVELY in Israel
* Yearly “Tax Year Gain-Loss Information” (referred as 1099 form) is supposed to be available at the beginning of each year (about 1..16 Feb) at the broker’s site (Firstrade: Tax Center). Such info is provided in .CSV format and can be directly used for tax reporting in Israel.
* 1099 xls document is NOT possible to get retroactively for ALL past years, just for the recent ONE
* To get such an info indirectly (for the years where 1099 is not already available) these steps are possible for Firstrade:
- Go to Account -> History menu
- switch to “Download Account History” tab
- set start and end dates and CSV format and press download. Note: start date is better to be at the portfolio beginning. This is for the case if any SELL action was for the stock that was bought in previous years
- use resulting .CSV file with the following script, created by me (the file path is hardcoded on this version): https://github.com/pageal/1099TaxScaner/blob/main/main.py SCRIPT NOTEs: 1) stocks are sold in First-In-First-Out order. Profits are calculated accordingly: SalePrice – BuyPrice in order from earliest bought stock to recently bought 2) for companies going public through SPAC the ticker name may change during the report period. For correct 1009 calculation .CSV file need to be fixed (before the script activation) by replacing the pre-SPAC ticker (and corresponding empty ticker-change line) with the FINAL ticker name of the company
- import resulting CSV file, sort by ‘Date Sold’ filed and delete all the lines related to previous years (not the one you are interesd in)
- Summarize ‘Total Gain/Loss’ column
– According to different criterias one can be defined as a trader OR an investor. This definition affects tax paid for profits. Described here in hebrew
CONCLUSIONS:
– be aware not just of resulting portfolio size BUT also of your formal profits (generated at sale points)
– it’s may be (in some cases) better to ballance/compensate/offset TAXABLE profits with losses before end of tax year (by selling with loss, and consequent buying back with current price if you still believe in the company in long term)
– be aware of amount of trading (and other characteristics of your activities) you do yearly and how this may be perceived by Israel tax authorities (investor/trader wise)
– do not forget to download your 1099 .CSV report every year