# Panama taxes for US citizens

If you are a US citizen, you are taxed on your worldwide income wherever you live, and moving to Panama or becoming Panamanian does not change that. You may exclude up to US$132,900 of foreign earned income for 2026 if you qualify, and you still report foreign accounts. There is no double tax treaty between the United States and Panama. This is US law: check it with a US tax professional.

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## Worldwide income

US regulations say all citizens of the United States, wherever resident, are liable to US income tax on income from sources inside and outside the United States. The IRS says the filing rules are generally the same whether you live in the United States or abroad.

Source: IRS, U.S. citizens and resident aliens abroad; 26 CFR 1.1-1

## The foreign earned income exclusion

For 2026 the exclusion is US$132,900. It covers income earned abroad, not all income. You claim it on Form 2555.

[Photo: Sandra Cohen-Rose and Colin Rose from Montreal, Canada](https://commons.wikimedia.org/wiki/File:Coronado_Beach_(4223439469).jpg)· [CC BY-SA 2.0](https://creativecommons.org/licenses/by-sa/2.0) 
- Your tax home must be in a foreign country.
- You must be a bona fide resident of a foreign country for an uninterrupted period that includes a full tax year, or be physically present outside the United States for at least 330 full days in any 12 consecutive months.

Source: IRS, tax inflation adjustments for 2026; IRS, foreign earned income exclusion

## FBAR and Form 8938

- FBAR: if the combined value of your foreign accounts was over US$10,000 at any time in the year, you file FinCEN Form 114 electronically by April 15, with an automatic extension to October 15. A Panamanian bank account counts, whether or not it earns income.
- Form 8938 for taxpayers living abroad: if not filing jointly, over US$200,000 on the last day of the year or over US$300,000 at any time. Filing jointly, US$400,000 and US$600,000.

Source: 31 CFR 1010.350; IRS, Report of Foreign Bank and Financial Accounts; IRS, do I need to file Form 8938

## No double tax treaty

Panama does not appear in the IRS list of US income tax treaties, and the United States is not among Panama’s treaties. The two countries signed a tax information exchange agreement on November 30, 2010, which serves to exchange information.

Source: IRS, United States income tax treaties A to Z; U.S. Treasury, tax information exchange agreements

## In Panama

Panama taxes you only on income produced in Panama. Foreign income, including a US pension or Social Security, is outside its territorial rule.

Source: Fiscal Code of Panama, article 694

## Giving up US citizenship

Becoming Panamanian does not end your US tax obligations by itself. For the IRS, you relinquish citizenship on the earliest of four dates, such as the day you renounce before a US consular officer if the State Department later issues a certificate of loss of nationality. A covered expatriate, for example someone with a net worth of US$2 million or more, is taxed as if all assets were sold the day before.

Source: IRS, expatriation tax

## Questions people ask

### Does my Panamanian bank report me?

Yes. Panama has a Model 1 FATCA agreement with the United States, in force since October 25, 2016.

### Do I pay Panamanian tax on my Social Security?

Panama does not tax income produced abroad.

### Is there a US Panama tax treaty?

No. There is only an agreement to exchange tax information, signed in 2010.

## What the law does not say

- A US Panama social security totalization agreement. We have not checked it in an official source.
- Whether a Panamanian cédula helps prove bona fide residence for the IRS.

## Official sources

- [IRS, U.S. citizens and resident aliens abroad](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad)
- [IRS, foreign earned income exclusion](https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion)
- [IRS, tax inflation adjustments for tax year 2026](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill)
- [IRS, Report of Foreign Bank and Financial Accounts](https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar)
- [IRS, do I need to file Form 8938](https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets)
- [IRS, United States income tax treaties A to Z](https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z)
- [U.S. Treasury, tax information exchange agreements](https://home.treasury.gov/policy-issues/tax-policy/tax-information-exchange-agreements-tieas)
- [IRS, expatriation tax](https://www.irs.gov/individuals/international-taxpayers/expatriation-tax)

Last verified: October 28, 2026

## Keep reading

- [Bank accounts and FATCA](/bank-account-crs/)
- [Double tax treaties](/tax-treaties/)
- [Does Panama tax foreign income?](/territorial-tax/)

## Planning your move to Panama?

Book a free 15-minute call with a Panamanian lawyer. We will tell you what applies to your case and what to prepare.

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