Lack of taxation for American citizens in the Republic of Panama is icing on the cake
Taxation for American citizens in the Republic of Panama is zero on the first $80,000 earned outside the U.S. A couple able to split income can earn up to $160,000 a year, enough to live like royalty and have a lot left over. This is one of the many Panama facts that can help sway a retirement decision.
Although foreigners retiring in Panama cannot normally work in a job that would take employment away from a citizen of the Republic of Panama, many retirees have lucrative businesses here. In fact, the government encourages it. Run a business the income of which is derived from a country other than Panama (an Internet-based business, for example), and there's no taxation here, either. Set up a tourism business and there are many Panamanian tax breaks.
Unlike most other countries, U.S. citizens are taxed on worldwide income, even if they no longer live in the U.S. The exception is the first $80,000 of foreign earned income.
The fact that there is no taxation for American citizens in the Republic of Panama on the first $80,000 of foreign earned income is a bonus for many Americans. Not only can they enjoy a great climate, most can keep every penny they earn outside the U.S.
To qualify, you must have foreign earned income, your main place of business must be in Panama (a home office will do), and you must be present in Panama for at least 330 days during any period of 12 consecutive months that include an entire tax year. Having a home or family still in the U.S. does not necessarily disqualify you.
No terrorism threats, no invasions of privacy, no snow, and no taxation for American citizens in Panama. Is this heaven, or what?
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