For US citizens and green card holders in Panama
US Taxes for Americans Living in Panama
An American in Panama deals with two tax systems. This page sets out the US side: the yearly return, accounts held in Panama, double tax relief, social security, and the Streamlined route for missed years.
Quick answer
Do US citizens living in Panama have to file US taxes?
Yes. The US taxes citizens and green card holders on worldwide income wherever they live. Living in Panama gives an automatic extension to June 15, accounts there above US$10,000 in total need an FBAR, and the foreign tax credit or the foreign earned income exclusion (US$132,900 for 2026) usually prevents double tax. The US does not have an income tax treaty with Panama, and there is no social security agreement.
At a glance
- Yearly US return
- Yes, on worldwide income; due June 15 automatically when living abroad
- US tax treaty with Panama
- No, per the IRS list
- Social security agreement
- No, per the SSA list
- Accounts in Panama
- FBAR above US$10,000 in total; Form 8938 above higher limits
- Behind on filing
- Streamlined: 3 years of returns, 6 years of FBARs
US filing duty for Americans in Panama
A US passport or green card keeps you in the US tax system after a move to Panama. The IRS expects a return covering income from everywhere, including your Panamanian salary or business income, in US dollars (IRS Pub 54).
Timing is a little kinder abroad: if you live and work outside the US on April 15, the filing date moves automatically to June 15, and an extension request takes it to October 15. Tax paid after April 15 still carries interest, so a payment estimate is worth making early.
Your accounts in Panama: FBAR and Form 8938
Bank, pension and investment accounts in Panama are foreign accounts for US purposes.
- FBAR: required when your foreign accounts total more than US$10,000 at any time in the year. Due April 15, with an automatic extension to October 15 (IRS).
- Form 8938: filed with the return when foreign financial assets pass higher thresholds; for a single person living abroad, more than US$200,000 at year end or US$300,000 at any time (US$400,000 and US$600,000 for a joint return). Not filing can cost US$10,000 (IRS).
Avoiding double tax between the US and Panama
Two US tools stop the same income being taxed twice.
- Foreign earned income exclusion: up to US$130,000 for 2025 and US$132,900 for 2026 of earned income, for people who qualify by residence or days abroad (IRS).
- Foreign tax credit: a credit against US tax for income tax paid in Panama.
There is no US income tax treaty with Panama (IRS treaty list), so relief from double tax comes only from US domestic rules: the foreign earned income exclusion and the foreign tax credit.
Which tool works better depends on your income and on how much tax Panama charges you; we compare both. See FEIE vs foreign tax credit.
Catching up on US filings
Catching up is usually possible without penalties. The Streamlined Foreign Offshore Procedures ask for 3 years of returns and 6 years of FBARs, with any tax and interest paid, and for eligible people living outside the US the penalties for late returns, information returns and FBARs do not apply (IRS). Eligibility turns on non-willful conduct and on meeting the non-residency test while in Panama. See Streamlined filing.
Working with your adviser in Panama
Americans in Panama include retirees, remote workers and people running consulting or property businesses.
We do not advise on the tax law of Panama. A local adviser handles your return there; we prepare the US return and filings and use the tax you paid in Panama for the credit.
How we help
Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares and signs US returns for Americans living in Panama: the yearly return with the exclusion or credit, FBAR and Form 8938, and Streamlined catch-up. Every engagement starts with a fixed written quote after we review the file. See the yearly filing package.
Where these rules come from (Panama)
Treaty and social security
- There is no US income tax treaty with Panama (not on the IRS A to Z list). Relief from double tax comes from the foreign tax credit under Code section 901 and the exclusion under section 911.
- Social security: no US agreement with Panama appears on the SSA list.
US law
- Form 8938: Code section 6038D and Treas. Reg. section 1.6038D (IRS Form 8938 instructions).
- FBAR: 31 USC 5314 and 31 CFR 1010.350 (IRS Internal Revenue Manual 4.26.16).
- Green card holders and residency: Code section 7701(b) (IRS Pub 519).
- Foreign earned income exclusion: Code section 911 (IRS Form 2555 instructions).
- Foreign tax credit: Code section 901 (IRS Pub 54).
The tax rules of Panama also apply to you there; a local adviser covers that side.
Americans in other countries
All country pages: US tax for Americans by country.
- Germany
- The Netherlands
- France
- The United Kingdom
- Spain
- Italy
- Portugal
- Ireland
- Switzerland
- Sweden
- Austria
- Belgium
- Denmark
- Norway
- Greece
- Poland
- Australia
- New Zealand
- Japan
- South Korea
- Israel
- Singapore
- Thailand
- The Philippines
- Costa Rica
- Chile
- The Czech Republic
- Finland
- Iceland
- Estonia
- Latvia
- Lithuania
- Slovakia
- Slovenia
- Turkey
- Romania
- China
- South Africa
- Brazil
- Uruguay
- Argentina
- Vietnam
- Hong Kong
- Malaysia
Common questions
Do Americans in Panama pay US tax?
Yes. US citizens and green card holders file a US return on worldwide income wherever they live. Living in Panama on April 15 gives an automatic extension to June 15, and tax paid in Panama or the foreign earned income exclusion often reduces the US tax to little or nothing.
Is there a tax treaty between the US and Panama?
No. The US does not have an income tax treaty with Panama. Relief comes from the foreign tax credit and the foreign earned income exclusion.
Do I pay social security in both the US and Panama?
It can happen. There is no US social security agreement with Panama, and self-employed Americans owe US self-employment tax even when they use the foreign earned income exclusion.
What if I never filed US taxes while living in Panama?
If it was not willful, the Streamlined Foreign Offshore Procedures let you file 3 years of returns and 6 years of FBARs, and eligible people living abroad do not pay the usual failure-to-file, information return or FBAR penalties.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- IRS: Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- IRS: United States income tax treaties, A to Z
- SSA: U.S. International Social Security Agreements
- IRS: Foreign earned income exclusion
- IRS: Report of Foreign Bank and Financial Accounts (FBAR)
- IRS: Comparison of Form 8938 and FBAR requirements
- IRS: U.S. taxpayers residing outside the United States (Streamlined)
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Yearly filing package, FEIE vs foreign tax credit, Streamlined filing.
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Social security: the US and Panama
The US has no social security (totalization) agreement with Panama; it is not on the SSA list (SSA). For a self-employed American there, US self-employment tax still applies to net earnings, and the foreign earned income exclusion does not reduce it (IRS Pub 54). Contributions you make in Panama may then sit on top. Employees of local employers are generally outside US social security, but the details depend on who employs you.