Doctors
How is it possible that many doctors are entitled to a tax refund?
The structure of the unique health system in Israel makes a distinction between the funding body – the kupot cholim (four primary health care providers, somewhat similar to HMOs) and insurance companies, the research body – university hospitals and the universities themselves, and the treating body – hospitals owned by the various kupot cholim and those which are nationally owned or owned by municipalities.
This widely-distributed structure causes a situation in which the average doctor works for a number of employers in their lifespan and most often, even receives a monthly salary from a number of work places in parallel. Mainly, a physician will receive a basic salary from a primary employer (generally the kupot cholim), a rotation salary in a hospital owned by a municipality, such as Tel Aviv Sourasky Medical Center (Ichilov Hospital) in Tel Aviv or Carmel Medical Center in Haifa, while also being paid for work as an instructor in a university. Especially lucky doctors will also receive funding from other organizations such as research funds or grants from the Ministry of Health to encourage relocation to the periphery.
What is the inherent problem in this process for doctors?
As is well known, a certain amount of income tax is withheld from an employee’s monthly salary. The calculation of the amount of tax to be withheld is conducted by the employer’s payroll system and the withholding is performed automatically according to this calculation. The problem begins with the fact that different employers’ payroll systems are not synchronized. Lacking information, the system will opt to deduct excess tax.
Another case in which payroll systems lack information to help them calculate deductions correctly is lack of continuous employment. For instance, ceasing work for exams, maternity leave, army reserve duty, etc. In these situations, too, the payroll system lacks the full information it needs to precisely calculate the monthly tax amount withheld, and therefore, in most cases, the tax amount calculated is significantly higher than that which the salaried employee was actually supposed to pay.
In both these cases, doctors may be eligible for a tax refund for the relevant year(s), and can obtain this refund by filing an income tax return.
Tax refunds for doctors
One more common reason for tax refund eligibility in the medical professions is tax reductions for an academic degree, which is applied in the form of annual tax credit points.
The medical track seems as if it would be considered a direct track to a doctorate. However, in fact for income tax purposes, doctors (as well as dentists) are treated differently. Since a physician has not had an opportunity to complete a Bachelor’s degree, then at the end of their course of studies, they receive both the tax credit point for a Bachelor’s degree and the half-point awarded for a Master’s degree. This provides an advantage for doctors – while most graduates with a Bachelor’s degree begin working for a low salary that barely requires paying taxes, and so don’t take advantage of their credit point, the credit point that doctors receive can actually save physicians a lot on their tax payments.
But that still isn’t all. A doctor is eligible for a benefit few are aware of: every profession which is nationally regulated (physician, accountant, lawyer, architect, etc.) also obligates those who seek to practice that profession to a period of internship – known in Israel and elsewhere as stage. For most of the stage period, the salary is low, and even lower when viewed on an annual basis given the lack of continuous employment caused by ceasing work for exams, waiting for a stage location, etc. The law recognizes this difficulty and has provided interns with an opportunity to defer receiving their credit point benefit for an academic degree until after the internship period, when in most cases the pay check is higher.
As a result, the doctor can defer their tax benefit until after the internship period ends, and in this way receive the benefit at a time when they’re employed at a higher rate.
How do I know if I’m also eligible for a tax refund?
You can request a tax refund for the past 6 years retroactively. If you’re a physician, you probably know by now that, chances are, you’re eligible for a tax refund. It’s very easy to get this refund. All you have to do is contact us, and with a quick process, without leaving the house, we’ll help you get all the money that you deserve.