Panama taxes locally. The U.S. taxes everywhere.
Panama taxes only Panama-source income, which makes it popular with Americans relocating, retiring, or investing there. The U.S. doesn’t follow that rule — so the U.S. return, and the reporting of Panamanian accounts, companies, and property, carry most of the weight.
Who this is for
Americans retiring or relocating to Panama
U.S. investors in Panamanian real estate or businesses
Owners of Panamanian companies or foundations with U.S. ties
Panamanian residents with U.S. income or filing obligations
Where these files go wrong
- 01
Assuming Panama’s territorial system means foreign income is untaxed everywhere
- 02
Panamanian corporations and private foundations with no U.S. reporting (Forms 5471, 3520)
- 03
Panama bank accounts left off FBAR and Form 8938
- 04
Rental income from Panamanian property left off the U.S. return
- 05
Retirement visas and local residency treated as if they changed U.S. filing
Working between the U.S. and Panama
On the U.S. side
- Annual returnAnnual U.S. return for citizens and green-card holders in Panama
- ExclusionForeign earned income exclusion where eligible
- TreatyNo treaty, so no treaty positions
- ReportingReporting of Panamanian accounts, companies, foundations, and property
On the Panama side
- Territorial taxTerritorial taxation — Panama-source income only
- StructuresCompany and foundation structures commonly used by foreigners
- Treaty and totalizationNo income tax treaty and no totalization agreement with the U.S.
- Local filingLocal filing by a Panamanian adviser where required
General orientation, not advice — confirmed for your facts in the engagement.
What we handle, start to finish
U.S. returns for expats and new residents
Forms 1040 and 1040-NR, dual-status years, foreign earned income exclusion (Form 2555), foreign tax credit (Form 1116)
Foreign account and asset reporting
FBAR (FinCEN 114) and Form 8938
Foreign company and partnership reporting
Forms 5471, 5472, 8858, and 8865
Treaty positions
Form 8833 and withholding coordination, where a treaty exists
Foreign trusts, pensions, and funds
Forms 3520 and 3520-A, PFIC analysis (Form 8621)
Catch-up filings
The Streamlined Filing Compliance Procedures for people who didn’t know they had to file
U.S. taxpayer numbers and real estate
Coordination with the foreign return
Whoever prepares the other country’s return, we make sure credits, dates, and positions match before either is filed
Three kinds of returns. One team that makes them agree.
We handle U.S. domestic returns, cross-border (U.S.–Canada) returns, and international tax returns. When a case calls for deeper expertise — in any country — we bring in hand-picked specialists who work under our lead. One team, one point of contact, one plan — and returns that agree.
- You know who is working on your file
- One plan and one price, quoted in writing
- Both returns reviewed together before anything is filed
How your file is staffed
- U.S. domestic returnsour U.S. Tax Desk
- Cross-border (U.S.–Canada)our U.S. and Canadian Tax Desks, together
- Internationalhand-picked country specialists, under our lead
- Your single point of contactFairlight
From first call to filed, on both sides
A free fit call
Fifteen minutes. Which countries, which years, what’s been filed. We tell you honestly what’s needed and whether we can coordinate the foreign side.
A written scope and price
The U.S. work and the coordination, quoted in writing before anything starts. No hourly meter.
Both sides prepared together
Each return is prepared with the same facts, and credits, dates, and positions are matched before either is filed.
Filed, and on a schedule
Both returns filed, deadlines tracked, and the next year planned — not just the one behind you.
U.S.–Panama tax, up front
Is there a tax treaty between the U.S. and Panama?
No income tax treaty. That makes U.S. reporting and the exclusions the main tools.
I retired to Panama. Do I still file U.S. returns?
Yes, every year, on worldwide income — including U.S. pensions and any Panama-source income.
I own a Panamanian corporation or foundation. What does the U.S. want?
Usually annual disclosures — Form 5471 for companies and Form 3520 for foundations treated as trusts — with significant penalties for missing them.
Does Panama tax my U.S. income?
Generally not, under Panama’s territorial system. The U.S. still does.
What does it cost?
It depends on the countries, the years, and the forms involved, so we quote it in writing after a short call — fixed, before any work begins. No hourly meter and no surprise add-ons.
How do we get started?
Book a free 15-minute fit call. Bring your last filed returns if you have them; if you don’t, book anyway.
An American living outside the U.S.? See U.S. expat returns for the filing rules that apply wherever you live, or all international tax.
Read our guide: U.S. Expat Taxes in Panama — What Americans Need to Know →
Ties to Panama? Start here.
A free 15-minute call, then a written scope and price. No payment until after.
The content on this page is for informational purposes only and does not constitute professional tax advice. International tax requirements depend on individual facts and circumstances and are subject to change. Foreign-country rules summarized here are general and change; your situation is confirmed in the engagement. See our full legal disclaimer.