--- title: "US tax for Americans in Panama | Expat Tax Abroad" url: https://expattaxabroad.com/insights/us-tax-americans-in-panama/ description: "Panama has an information-exchange agreement rather than a tax treaty, and taxes territorially — so the exclusion does the work and a company adds Form 5471." lang: en --- Skip to content IRS Enrolled Agent · One preparer, every return 48 country guides 48 guides (https://expattaxabroad.com/countries/) Verify at IRS.gov: https://irs.treasury.gov/rpo/rpo.jsf Facebook: https://www.facebook.com/people/Jorge-I-Rivas-ExpatTax/61572578032002/ Instagram: https://www.instagram.com/jrivas0013/ LinkedIn: https://www.linkedin.com/in/jorgeirivas1186sm X: https://x.com/jrivas0013 Filing rules · 22 September 2026 # US tax for Americans in Panama There is no US–Panama income tax treaty — the 2010 agreement is about information exchange — and no totalization agreement. Panama taxes territorially, so income earned outside Panama is generally untaxed there and the exclusion does the work, exactly as it does in the Gulf. Owning a Panamanian company is a different conversation entirely. Image: No treaty and no totalization agreement, both struck through, with an information-exchange agreement noted as providing no relief. (https://expattaxabroad.com/features/art-panama-1600.webp) Image: Jorge I. Rivas, EA (https://expattaxabroad.com/_astro/jorge-rivas-avatar.BkTc9hQv_ZqNxAY.webp) Jorge I. Rivas, EA Enrolled Agent · 6 minutes to read ## An information-exchange agreement is not a treaty The 2010 agreement improves transparency between the two governments. It contains no residency article, no pension article, no reduced withholding and no relief of any kind for a taxpayer. It is not something you can claim a position under. What it does mean is that information about Panamanian accounts and structures moves more freely than it used to — which is worth knowing for anyone whose planning assumed otherwise. ## Territorial taxation makes this a Gulf-shaped return Panama taxes Panamanian-source income and generally leaves foreign-source income alone. For a remote worker or a retiree living on US income, the result is the same as Kuwait or Qatar: no local tax, therefore no credit, and the exclusion carries the return with the housing exclusion behind it. Panamanian-source income is taxed at rates to 25%, so local clients or a Panamanian business create a creditable tax where none existed before. ## Self-employment tax applies in full With no totalization agreement, 15.3% self-employment tax applies to net earnings whatever the exclusion does to income tax. For the remote workers and consultants who make up much of the American population here, that is the entire US liability in a typical year. ## A residency visa is not a tax status The Friendly Nations visa and similar routes are immigration status. Holding one changes nothing about a US filing obligation, which follows citizenship — and nothing about whether the exclusion applies, which follows the tax home and the qualifying period. ## Owning a Panamanian company is a different return Panama's role as a corporate domicile means US owners of Panamanian entities should expect Form 5471, and possibly Form 8938 and a PFIC analysis, along with the controlled foreign corporation rules that can tax undistributed income currently. That is a materially different engagement from a simple remote-worker return, and it is worth saying so before the year is over rather than at filing. ## A worked example, tax year 2025 A single American consulting for US clients from Panama City, $95,000 of net self-employment earnings, with no Panamanian-source income. | Net self-employment earnings | $95,000 | | --- | --- | | Panamanian tax paid on foreign-source income | $0 | | Foreign tax credit available | $0 | | US income tax after the exclusion | $0 | | Self-employment base, 92.35% of net earnings | $87,732 | | Self-employment tax at 15.3% | $13,423 | The exclusion removes the income tax and there is no Panamanian tax to credit, because Panama did not tax this income. The $13,423 of self-employment tax is the return's entire liability — and adding a Panamanian company to the picture adds Form 5471 and the controlled foreign corporation rules rather than reducing it. Sources: IRC §911, §1401 and §1402; IRS Form 5471 instructions. Scroll the table sideways | Fact | Position | | --- | --- | | US income tax treaty | No — information exchange only | | Totalization agreement | No | | Local income tax | Territorial — Panamanian-source income only, to 25% | | Self-employment tax (SECA) | 15.3%, no relief | | FBAR threshold | $10,000 aggregate, any point in the year | Sources IRC §911, §1401, §1402 and §951–965; the 2010 US–Panama tax information exchange agreement; Social Security Administration totalization agreement list; IRS Publication 54; IRS Form 2555, Form 5471 and Form 8938 instructions; Panamanian territorial taxation; Rev. Proc. 2025-32; 31 CFR 1010.350. US figures are tax year 2025. Checked 22 September 2026. Change log 22 September 2026 First published Panama — full country guide →: https://expattaxabroad.com/countries/panama/ Expat tax returns →: https://expattaxabroad.com/services/expat-tax-returns/ FBAR / FATCA compliance →: https://expattaxabroad.com/services/fbar-fatca-compliance/ Treaty & totalization matrix →: https://expattaxabroad.com/tools/treaty-totalization-matrix/ Streamlined catch-up filing →: https://expattaxabroad.com/services/streamlined-catch-up-filing/ Home →: https://expattaxabroad.com/ All insights →: https://expattaxabroad.com/insights/ ## Questions Americans in Panama ask ### Does the US have a tax treaty with Panama? No. The 2010 agreement covers information exchange, not double taxation. It contains no residency article, no pension article and no relief you can claim. ### Is my US income taxed in Panama? Generally not — Panama taxes territorially, so foreign-source income is usually outside its tax. That also means no Panamanian tax to credit, so the exclusion is the relief that matters. ### I own a Panamanian company. What does that add? Form 5471, probably Form 8938, and the controlled foreign corporation rules, which can tax undistributed income currently. It is a materially different return from a straightforward remote-worker one. ### Does a Friendly Nations visa change my US tax position? No. It is immigration status, not tax status. The US filing obligation follows citizenship, and whether the exclusion applies follows your tax home and qualifying period. ### I have not filed for several years while in Panama. What now? If the failure was non-willful — which describes most people in this position — the Streamlined Foreign Offshore Procedures waive the failure-to-file, failure-to-pay and FBAR penalties: three years of returns, six years of FBARs, and Form 14653. ## Living in Panama, or holding a company there? Fifteen minutes separates the simple case from the Form 5471 one — they are not the same return. Book a 15-minute call: https://expattaxabroad.com/book/ Complete return $599 Prepared and signed by an Enrolled Agent Book a call (https://expattaxabroad.com/book/) ## Structured data ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Person", "@id": "https://expattaxabroad.com/#jorge", "name": "Jorge I. Rivas", "honorificSuffix": "EA", "jobTitle": "Enrolled Agent", "description": "IRS Enrolled Agent specialising exclusively in US tax for Americans living abroad. In practice since 2012; an Enrolled Agent since 2015.", "url": "https://expattaxabroad.com/about/", "image": "https://expattaxabroad.com/_astro/jorge-rivas.fESe4h1B.webp", "sameAs": [ "https://irs.treasury.gov/rpo/rpo.jsf", "https://jorgerivas.pro", "https://www.facebook.com/people/Jorge-I-Rivas-ExpatTax/61572578032002/", "https://www.instagram.com/jrivas0013/", "https://www.linkedin.com/in/jorgeirivas1186sm", "https://x.com/jrivas0013" ], "knowsAbout": [ "Foreign Earned Income Exclusion", "foreign housing exclusion", "FBAR (FinCEN Form 114)", "FATCA (Form 8938)", "Streamlined Foreign Offshore Procedures", "self-employment tax (SECA)", "totalization agreements", "physical presence test" ], "worksFor": { "@id": "https://expattaxabroad.com/#practice" }, "hasCredential": { "@type": "EducationalOccupationalCredential", "credentialCategory": "IRS Enrolled Agent", "recognizedBy": { "@type": "GovernmentOrganization", "name": "Internal Revenue Service", "url": "https://www.irs.gov/" } } }, { "@type": "AccountingService", "@id": "https://expattaxabroad.com/#practice", "name": "Expat Tax Abroad", "url": "https://expattaxabroad.com", "email": "expattaxabroad@gmail.com", "telephone": "+1-803-467-5815", "description": "US federal and state tax returns for Americans living abroad, prepared and signed by Jorge I. Rivas, an IRS Enrolled Agent. All fees are published. Complete Return $599.", "image": "https://expattaxabroad.com/og/home.png", "logo": "https://expattaxabroad.com/icon-512.png", "priceRange": "$125–$1,395", "currenciesAccepted": "USD", "founder": { "@id": "https://expattaxabroad.com/#jorge" }, "employee": { "@id": "https://expattaxabroad.com/#jorge" }, "areaServed": "Worldwide", "knowsAbout": [ "Foreign Earned Income Exclusion", "foreign housing exclusion", "FBAR (FinCEN Form 114)", "FATCA (Form 8938)", "Streamlined Foreign Offshore Procedures", "self-employment tax (SECA)", "totalization agreements", "physical presence test" ], "address": { "@type": "PostalAddress", "streetAddress": "133 Cedar Chase Ln", "addressLocality": "Irmo", "addressRegion": "SC", "postalCode": "29063", "addressCountry": "US" }, "sameAs": [ "https://irs.treasury.gov/rpo/rpo.jsf", "https://jorgerivas.pro", "https://www.facebook.com/people/Jorge-I-Rivas-ExpatTax/61572578032002/", "https://www.instagram.com/jrivas0013/", "https://www.linkedin.com/in/jorgeirivas1186sm", "https://x.com/jrivas0013" ], "hasOfferCatalog": { "@type": "OfferCatalog", "name": "Published fees", "itemListElement": [ { "@type": "Offer", "name": "Complete Return", "description": "Federal, one state, FBAR, FATCA, FEIE/FTC optimisation, foreign housing exclusion, treaty positions", "price": "599", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Essential Return", "description": "Federal + FBAR, single country, employment income", "price": "449", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Complex Return", "description": "Self-employment, rental, investments, dual-status, or multiple countries in one year", "price": "995", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Catch-Up Package", "description": "Streamlined: 3 returns, 6 FBARs, Form 14653, plus next year's Complete Return free", "price": "1395", "priceCurrency": "USD" }, { "@type": "Offer", "name": "FBAR-Only Filing", "description": "Up to 5 accounts (+$45 per additional 5)", "price": "125", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Additional state return", "price": "89", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Expat Tax Position Review", "description": "45 minutes, written summary, credited in full against any package booked within 60 days", "price": "195", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Federal extension (Form 4868)", "price": "0", "priceCurrency": "USD" }, { "@type": "Offer", "name": "Qualification call", "description": "15 minutes, bookable directly", "price": "0", "priceCurrency": "USD" } ] } }, { "@type": "WebSite", "@id": "https://expattaxabroad.com/#website", "name": "Expat Tax Abroad", "url": "https://expattaxabroad.com", "publisher": { "@id": "https://expattaxabroad.com/#practice" } }, { "@type": "WebPage", "@id": "https://expattaxabroad.com/insights/us-tax-americans-in-panama/#webpage", "url": "https://expattaxabroad.com/insights/us-tax-americans-in-panama/", "name": "US tax for Americans in Panama | Expat Tax Abroad", "description": "Panama has an information-exchange agreement rather than a tax treaty, and taxes territorially — so the exclusion does the work and a company adds Form 5471.", "inLanguage": "en", "dateModified": "2026-09-22", "isPartOf": { "@id": "https://expattaxabroad.com/#website" }, "about": { "@id": "https://expattaxabroad.com/#practice" } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://expattaxabroad.com" }, { "@type": "ListItem", "position": 2, "name": "Insights", "item": "https://expattaxabroad.com/insights/" }, { "@type": "ListItem", "position": 3, "name": "US tax for Americans in Panama" } ] }, { "@type": "BlogPosting", "headline": "US tax for Americans in Panama", "description": "A TIEA is not a treaty. It improves transparency between two governments and gives you no residency article, no pension article and no relief.", "datePublished": "2026-09-22", "dateModified": "2026-09-22", "url": "https://expattaxabroad.com/insights/us-tax-americans-in-panama/", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://expattaxabroad.com/insights/us-tax-americans-in-panama/" }, "inLanguage": "en", "image": [ "https://expattaxabroad.com/features/art-panama-1600.webp" ], "author": { "@id": "https://expattaxabroad.com/#jorge" }, "publisher": { "@id": "https://expattaxabroad.com/#practice" }, "isPartOf": { "@type": "Blog", "@id": "https://expattaxabroad.com/insights/", "name": "Expat Tax Abroad — Insights" } }, { "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "Does the US have a tax treaty with Panama?", "acceptedAnswer": { "@type": "Answer", "text": "No. The 2010 agreement covers information exchange, not double taxation. It contains no residency article, no pension article and no relief you can claim." } }, { "@type": "Question", "name": "Is my US income taxed in Panama?", "acceptedAnswer": { "@type": "Answer", "text": "Generally not — Panama taxes territorially, so foreign-source income is usually outside its tax. That also means no Panamanian tax to credit, so the exclusion is the relief that matters." } }, { "@type": "Question", "name": "I own a Panamanian company. What does that add?", "acceptedAnswer": { "@type": "Answer", "text": "Form 5471, probably Form 8938, and the controlled foreign corporation rules, which can tax undistributed income currently. It is a materially different return from a straightforward remote-worker one." } }, { "@type": "Question", "name": "Does a Friendly Nations visa change my US tax position?", "acceptedAnswer": { "@type": "Answer", "text": "No. It is immigration status, not tax status. The US filing obligation follows citizenship, and whether the exclusion applies follows your tax home and qualifying period." } }, { "@type": "Question", "name": "I have not filed for several years while in Panama. What now?", "acceptedAnswer": { "@type": "Answer", "text": "If the failure was non-willful — which describes most people in this position — the Streamlined Foreign Offshore Procedures waive the failure-to-file, failure-to-pay and FBAR penalties: three years of returns, six years of FBARs, and Form 14653." } } ] } ] } ```