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RICH Novak of RE/MAX Beaches & City! INC. – Best Places In The World To Retire User Account
When you retire in Panama on the Pensionado Visa, you cannot work, but you can own a company. Me, as an example, being a Pensionado, I cannot work, but I can own a company and pay income taxes on my company’s income to the government of Panama.
 
If you come to Panama with a Friendly Nations Visa, you could own a company, but in many respects, you cannot work. Moreover, if you cannot work, you cannot have income. Hence, you cannot pay taxes either.
Jay Butler of Asset Protection Services of America – Best Places In The World To Retire User Account
If you are U.S. citizen with foreign earned income and are (or will be) a bona fide resident of a foreign country for any entire year, or physically present in a foreign country for no less than 330 days during a year, then you may qualify for the "Foreign Earned Income Exclusion" as allowed by the Internal Revenue Service (IRS):
 
Advantage to Working Abroad - The Foreign Earned Income Exclusion
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation:
  • $91,400 for 2009
  • $91,500 for 2010
  • $92,900 for 2011
  • $95,100 for 2012
In addition, you can exclude or deduct certain foreign housing amounts.  You may want to research or inquire about IRS form 2555 for more information.
 
Disadvantage to Retiring Abroad - Receiving SSI and Medicare
Although you should still be eligible to receive Social Security (SS) irrespective of where you live, if you are a U.S. citizen and move offshore Supplemental Security Income (SSI) and Medicare payments will cease to be paid.  SSI is taxpayer funded program which assists the blind, elderly, low income and disabled and is not available to U.S. citizens living abroad.  Likewise, Medicare provides no coverage overseas but may be available for those who are living in a foreign country for an undetermined period of time and have plans to return.
 
As with any tax matter, it is always advisable to seek the competent advise of a tax professional.
 
Elizabeth Vance of The Gringo Guide To Panama: What To Know Before You Go – Best Places In The World To Retire User Account
Tabitha is correct in what she said. As a US citizen, you must file your US taxes every year, no matter what. 
 
The foreign income tax exclusion of up to $95,000 does come in handy as well as a credit too. This was a nice surprise for us, when we moved here.
 
I don't consider it a disadvantage, but it does get a bit tiresome to file my taxes in Panama (which requires an accountant, especially if you don't speak Spanish). Those are due prior to March 15th each year for individuals.  Then, that tax return must be used as part of your US tax return.
Tabitha Paddock of Greenback Expat Tax Services – Best Places In The World To Retire User Account
taxes – Best Places In The World To Retire – International LivingOne of the biggest tax advantages of living abroad is enjoying lower tax rates (depending on where you retire obviously) found in some outside countries. However, as a US citizen or Greencard holder, you are required to report your worldwide income to the US every year. Even if you are no longer living or working in the US.  This often means two tax returns, and twice as much taken in tax... Right? Wrong!
 
Fortunately, the US has certain exclusions and credits in place to limit this dual taxation. These credits can go a long way to limit (or even eliminate) any tax liability in the US. The biggest credit is the Foreign Earned Income Exclusion, this allows you to exclude over 95K of income from being taxed in the USA. If your earned income falls under this limit, you will not owe the US any tax (even if you won't owe anything you still have to file).
 
If you properly use the available credits and exclusions, you can actually enjoy the low tax rates of certain countries!
 
 

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Best Places In The World To Retire Expat Stories contains text, video, and photos by people just like you who are already living abroadUse the menu on this page to go to categories of Stories.
Best Places In The World To Retire Community Questions and Answers about living and retiring abroadUse the menu on this page to go to other categories of questions.
The Best Places In The World To Retire Location Advisor makes personalized recommendations for where to live and retire overseasGet matched to your ideal location to live abroad.
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Best Places In The World To Retire Expat Stories contains text, video, and photos by people just like you who are already living abroadStories by expats & others about their life aborad.
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