Form 1040-C: U.S. Departing Alien Income Tax Return (2010)
What Form 1040-C Is For
Form 1040-C is a special tax form that non-U.S. citizens (called "aliens" in tax terminology) must file before leaving the United States or its territories. Think of it as your tax "exit ticket" from the country. The form serves two main purposes: first, to report all income you received or expect to receive during the entire tax year up to and including your departure date, and second, to pay any taxes you owe on that income. The form helps the IRS ensure that departing non-citizens settle their U.S. tax obligations before leaving, since it would be difficult to collect taxes once someone has left the country.
When you file Form 1040-C and pay any required taxes, you receive what's commonly called a "sailing permit" or "departure permit"—officially known as a certificate of compliance. This document certifies that you've satisfied your U.S. tax obligations according to available information. It's important to understand that Form 1040-C is not your final income tax return for the year. You'll still need to file a regular tax return (Form 1040, 1040-NR, or another appropriate form) after your tax year ends, and any taxes you paid with Form 1040-C will count as a credit toward your total tax liability.
When You’d Use Form 1040-C
You must file Form 1040-C at least two weeks before your planned departure date, but no more than 30 days in advance. This timing is crucial because processing takes time, and you shouldn't wait until the last minute in case unexpected problems arise. If you're departing between January 1 and April 15, you must also file your previous year's tax return and pay any taxes due for that year before you can receive your sailing permit.
Unlike regular tax returns, Form 1040-C doesn't have traditional "late" or "amended" filing procedures because it's tied directly to your departure. If your travel plans change after filing, the certificate you receive generally remains valid for all departures during the current tax year—though the IRS can revoke it for later departures if they believe tax collection would be jeopardized. If you previously departed during the same tax year and filed Form 1040-C, you would note any tax already paid when filing for a subsequent departure. The form operates on an appointment-based system with IRS Taxpayer Assistance Centers, so you must call 844-545-5640 between 7 a.m. and 7 p.m. local time to schedule your visit well in advance of your departure date.
Key Rules or Details for 2010
Exemptions From Filing
Several important rules govern who must file Form 1040-C and how the process works. First, not everyone needs to file this form. You're exempt if you fall into certain categories, such as:
- Foreign government representatives with diplomatic passports
- Students on F-1 or J-1 visas who only received certain types of income
- Short-term business visitors on B-1 visas staying less than 90 days
- Canadian and Mexican residents who commute to work in the U.S. and have taxes withheld
Filer Groups
The form divides filers into three groups:
Group I — Resident Aliens
Resident aliens (green card test or substantial presence test) report worldwide income similar to U.S. citizens.
Group II — Nonresident Aliens With Effectively Connected Income
Includes wages or business profits connected to a U.S. trade or business.
Group III — Nonresident Aliens With Non-Effectively Connected Income
Includes dividends, interest, and similar income taxed at 30% unless treaty benefits apply.
Payment Rules
Payment is generally required when filing, but exceptions exist:
- If you can show your departure doesn't jeopardize tax collection, the IRS may issue a sailing permit without upfront estimated taxes.
- The IRS may accept a bond instead of payment.
- All payments must be made in certified funds (cashier's check, certified money order, or cash).
Step-by-Step (High Level)
Step 1: Gather Required Documentation
Begin by gathering documents at least three weeks before departure:
- Passport with alien registration card/visa
- Previous two years’ tax returns
- Receipts for taxes paid
- Employer wage statements
- Proof of estimated tax payments
- Property gain/loss documentation
- Proof of taxpayer identification number
Step 2: Schedule Your IRS Appointment
Call the IRS Taxpayer Assistance Center line (844-545-5640) to schedule an appointment.
Step 3: Complete the Form
Form 1040-C includes four major parts:
Part I — Alien Status
Covers visa type, entry dates, residency, occupation, citizenship, property ownership, and plans to return.
Part II — Exemptions
Resident aliens may claim standard exemptions; nonresidents are limited unless treaty benefits apply.
Part III — Tax Liability
Report all income received or expected to receive during the year, apply deductions/credits, and compute tax.
Schedules
- Schedule A: Types of income
- Schedule B: Property sales not connected to a U.S. business
- Schedule C: Itemized deductions
- Schedule D: Tax computation
Step 4: Determine Tax Due or Overpayment
Any overpayment is not refunded until you file your final annual tax return.
Common Mistakes and How to Avoid Them
Waiting Too Long
The most common mistake is failing to start early enough. You must book an appointment weeks in advance.
Misclassifying Residency Status
Many filers get confused between:
- Immigration status vs.
- Tax residency status (green card test, substantial presence test)
This affects tax rates, credits, and deductions.
Incomplete Income Reporting
You must include:
- Income already received
- Income expected through your departure date
Nonresidents often mistakenly include exempt income such as:
- Bank interest
- Capital gains when in the U.S. fewer than 183 days
Missing Documentation
Missing documents can delay or stop the process entirely. Bring:
- All wage statements
- Past tax returns
- Spouse’s documents if applicable
Thinking Form 1040-C Is a Final Return
Form 1040-C is not a final return—you must still file Form 1040 or 1040-NR after the year ends.
What Happens After You File
IRS Review
At your appointment, the IRS will:
- Review Form 1040-C
- Review documentation
- Accept payment
- Issue a signed certificate of compliance (sailing permit)
Types of Certificates
Valid for the Entire Tax Year
Issued when no tax collection risk exists.
Limited to One Departure
Issued if the IRS believes your departure could jeopardize tax collection.
After You Depart
Keep your certificate and your Form 1040-C copy. Later, you must:
- File a final annual return
- Report full-year income
- Claim credit for taxes paid with Form 1040-C
If the IRS later determines additional tax is due, they can assess tax plus penalties and interest.
FAQs
#### What's the difference between Form 1040-C and Form 2063?
Form 2063 is a shorter alternative for certain qualifying aliens who either:
- Had no taxable income, or
- Are resident aliens whose departure won’t hinder tax collection
It does not require detailed income reporting.
#### Can married couples file Form 1040-C jointly?
- Nonresident aliens may never file jointly.
- Resident aliens may file jointly only if:
- Both expect to file jointly at year-end, and
- Both tax years end at the same time
#### What if I need to leave urgently and can't wait two weeks?
You must still contact your local IRS office immediately. Expedited processing may be possible only in true emergencies, but it's not guaranteed.
Leaving without a required sailing permit can result in serious tax compliance issues.
#### Do I still need to file my annual return?
Yes. Form 1040-C is not your final return.
You must file:
- Form 1040 (if resident at year-end)
- Form 1040-NR (if nonresident at year-end)
- A dual-status return (if status changed)
#### What happens if I overpaid tax with Form 1040-C?
Refunds are not issued based on Form 1040-C.
You will receive any refund through your final annual tax return.
#### What if I return to the United States after filing Form 1040-C?
Your certificate generally remains valid for additional departures within the same tax year unless the IRS revokes it.
For a new tax year, you must file Form 1040-C again.
#### Are some countries treated differently under Form 1040-C rules?
Yes. Tax treaties may:
- Reduce withholding rates
- Allow additional exemptions
- Provide special treatment for certain income types
Treaty benefits must be documented and cited on Form 1040-C.
Sources
All information in this guide comes from official IRS publications available at IRS.gov, including:
- Form 1040-C and its instructions
- Topic No. 858 (Alien Tax Clearance)
- Departing Alien Clearance guidance
- Publication 519 (U.S. Tax Guide for Aliens)
