We Moved To BOQUETE PANAMA
The Nomadic Movement Forum
The Foreign Earned Income Exclusion allows you to exclude a certain amount of your FOREIGN EARNED income from US tax. For tax year 2018 (filing in 2019) the exclusion amount is $103,900. What this means is that if, for example, you earned $118,000 in 2018, you can subtract $103,900 from that leaving $14,100 as taxable by the US. But beware: this $14,100 is taxable at tax rates applying to $118,000 (the so-called “stacking rule”). The exclusion applies only to foreign earned income. Other income, such as pensions, interest, dividends, capital gains, US-sourced income, etc., cannot be excluded with the FEIE. You are liable for full US tax on this type of income.
Here’s a simple example. Suppose you live in France and you earned EURO 100,000 (about $118,000) from your French employer. You are married filing jointly, have two children and you take the standard deduction ($24,000) and child tax credit ($4,000 for two children).
The US tax on this income is calculated as follows:
US tax on $118,000 is $8,559
US tax on $103,900 (amount excluded) would be $5,457
Net US tax payable
($8,559 – $5,457) = $3,102
And for Panama taxes:
According to basic Panamanian law, individuals do not pay tax on any income originating from outside the country, including retirement, dividends, and interest income. For this reason, many leading internet-based businesses have set-up headquarters in Panama.
Also Panama offers special benefits for retirees! Retirees with a pensions may qualify for the Panama retirement visa (USA – Social Security qualifies), also called the “Panama Pensionado Visa”. Google “Panama Pensionado Visa” program and you’ll see all the benefits and how to get started. A couple can live well in Panama for $2,000 a month or less, including rent, really! 
“Panama has a lot of extremely attractive features that beckon expats to its beautiful beaches and lush mountain havens. It is a nation that is extremely welcoming to foreigners and perhaps never more so than when it offers to retirees a whole host of discounts, on everything from airfare to home phone service.”
“These benefits are part of Panama’s Pensionado Program, a neat little package of perks tailored to retirees of all ages. Depending on where you choose to settle, the cost of living in Panama is already extremely affordable. However, the benefits offered to pensioners can make retiring to this Central American destination all the more lucrative.”
Panama’s Pensionado Program’s Benefits
The discounts and advantages of the pensioner’s visa are quite numerous. Here they are in a nutshell:
50% off on recreation and entertainment such as movies, theaters, sports, etc.
50% off hotels Monday through Thursday (30% off on weekends)
50% off passports
30% off public transportation like buses, trains, and boats
25% off airfare
25% off restaurants (15% off fast food)
25% off electrical, telephone, and water service
20% off doctors and specialists
20% off prosthetics and other personal assistance devices
15% off hospitals and private clinics
15% off dental and optometry services
10% off prescription medications
tax-free importation of household goods, up to $10,000
tax-free importation of a vehicle, or tax-free purchase of a local vehicle, every 2 years
