Actually, if you're a US citizen living in Panama, you can probably make use of the Foreign Earned Income Tax Exclusion. In 2016 it was $101,300 USD.
If you found Jerry's post complicated and boring, you'll appreciate his post after reading this:
https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
Lol. Yeah, I'm not American or an accountant so I'm not going to read that. But good luck to anyone who does want to read it or needs to for their job.
thanks for that bit good to have