Deciding to retire overseas is an important enough process but there are many crucial issues that you must be aware of in going down your checklist of things to consider. Taxes and your tax status overseas should be high up on your list of retirement issues.
Depending upon where you hail from, the tax status of a pensioner overseas has become more complicated, especially for citizens and residents from the United States.
According to taxesforexpats.com “As a U.S. Citizen or green card holder you are legally required to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country.” It would be wise, however, to study thoroughly Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, Publication 514, Foreign Tax Credit for Individuals, and Publication 901, U.S. Tax Treaties, to determine first, if you should file given the source of your income and the total amount. In Panama there exist many groups of expat retirees whose income sources run a wide gamut. So, take a good look at these publications that are available to read and download on line here. If in doubt, you can always turn to one of several tax specialists like the one we cited above for more clarification. They will be happy to help you for a fee.
Panama´s Disounts to Retired Persons
One of the more attractive points about retiring in Panama, of course, is the Descuentos a Jubilados, a series of discounts to Pensioners/Retirees that can be quite advantageous when it comes to stretching your retirement income while enjoying a better quality of life.
ACODECO, the consumer protection arm of Panama provides a handy little pamphlet entitled Ley 6 de 1987 which enumerates benefits to retired women 55 years or older and men 60 years or older and these discounts are applicable whether you are a Panamanian citizen or a foreign resident. The discounts, in my opinion, are quite generous and include 15% off hospital and clinic visits, 15% for dentist’s visits, 15% for optometry visits and perscriptions, 25% off for airline tickets, 50% off for Panamanian passport (for Panamanian nationals), 50% off for entertainment facilities such as movie theatres and sports events, 20% off for medicines (these do not include supplements), and many more. There are even discounts applicable to your motel, hotel and pension stay 30-50% depending on the day of the week. Please take a look at this publication which is really a copy of the Law 6 here; it is well worth perusing.