'Q&A: Expat taxation'

Q&A: Expat taxation

By Blog Answers at 01/07/09 07:25

On 07/18/08 22:56, Ron Van Scoy asked the following question:

I am retired and most of my income is from stock investments, interest on savings, social security etc. If I live in Panama how will I be taxed? By the US? Panama? Both?

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Answer #1 On 01/07/09 07:20, Jim from New York answered:

If you are a U.S. Citizen or a legal resident of the USA... you are taxed on your worldwide income. That means whether you live in the USA, Panama or anyplace else, you will file your U.S. Income Tax returns just the same.

There are a couple of minor differences in due dates and for earned income a possible deduction of up to $80 some thousand dollars.

I believe that Panama does not tax income from outside its borders. So a U.S. Pension should have no Panama tax liabilities. If you had rental property in Panama you would need to report the rental income to Panama and the USA. They might also give tax credits for taxes paid to the other country, resulting in an effective tax rate of which ever was highest and a lot more paperwork.

Hopefully, someone can follow up with more specifics on the tax system in Panama.

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