What Form 1040-C (2021) Is For
Form 1040-C is used to help a taxpayer meet tax obligations before leaving the United States. The IRS reviews income, taxes, and any outstanding liabilities to determine whether the individual is compliant under IRS Form 1040-C 2021 rules. The process ensures that a tax clearance certificate can be issued once all required information has been submitted.
The form confirms a taxpayer’s tax compliance status based on the data provided and documents presented. Individuals must follow IRS instructions, provide proof of identity, and submit details about income and payment history. Once the review is processed, the IRS determines whether the individual is eligible to obtain a tax clearance.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive Form 1040-C: U.S. Departing Alien Income Tax Return (2021) – A Complete Guide.
When You’d Use Form 1040-C
Individuals use this form when they expect to leave the country and must request confirmation of their compliance status. The IRS reviews tax records, bank statements from financial institutions, business activity, and any liabilities associated with the account. A taxpayer must apply if there is a need to show that taxes have been paid or properly reported.
A taxpayer who is non-compliant or uncertain about past filing requirements may need to contact the department for assistance. New users filing for the first time may also visit the IRS webpage to download the form, review instructions, or learn how to apply. The goal is to ensure a certificate can be issued before the departure date.
Key Rules or Details for 2021
Under the 2021 rules, the IRS reviews income, payment records, and supporting documents to verify accuracy before issuing the certificate—the process checks for outstanding liabilities, missing returns, and omissions in taxation data. A taxpayer must provide a copy of prior filings, proof of residency, and any details required by the Treasury.
The IRS may mail a letter requesting more information or ask individuals to present updated documents in person. The form must be printed, signed, and submitted with the required supporting paperwork. Individuals should follow the instructions on the page to ensure the form is processed correctly.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for Individual Schedules.
Step-by-Step (High Level)
Step 1: Determine Whether Filing Is Required
A taxpayer must bring complete identification and financial records to the IRS appointment. Required items include:
- A passport, an alien registration card, or other documents indicating identity
- Copies of income tax returns filed for the past two years or the preceding year
- Documents showing wages, self-employment income, business expenses, capital assets, or fellowship grants
- Bank records, documents showing taxes, canceled checks, and information indicating tax withheld or income taxes paid
- Records of estimated tax payments and payments from banking institutions
- Documents showing dependents, employment, or other financial activity
- An airline ticket or document verifying departure plans
Step 3: Schedule an Appointment
A taxpayer must contact the IRS office to request an appointment at a Taxpayer Assistance Center, where availability varies by location. The meeting allows IRS personnel to review taxable income, supporting documents for income, and any outstanding tax liabilities. Appointments should be scheduled at least two weeks before departure.
Step 4: Complete the Form
The taxpayer must complete all sections of the form with income expected through the departure date. The information must accurately reflect business activities, expenses, and tax obligations to prevent delays in payment processing.
Step 5: Attend the Appointment
The taxpayer must appear in person with all required documents. IRS personnel review taxable income, income taxes paid, dependents, business expenses, and details from past year income tax returns. If any tax is owed, payment must be made using certified funds.
Step 6: Obtain the Certificate
After the review is complete, the IRS issues the certificate authorizing departure. This document functions as the sailing permit or departure permit and confirms that pre-departure obligations were met, although it does not finalize the year’s tax computation.
Step 7: File the Annual Return
After the tax year ends, the taxpayer must file a regular income tax return. Any tax paid with Form 1040-C is credited toward the final liability, and a refund is issued if the amount paid exceeds what is owed.
Common Mistakes and How to Avoid Them
Taxpayers often make errors when applying for a sailing or departure permit. The most common mistakes include:
- Failing to file before departure: Leaving the United States without obtaining the certificate creates compliance issues; always file Form 1040-C early enough to complete the review before travel.
- Assuming exemption without verification: Misinterpreting visa categories or relying on short stays can lead to incorrect assumptions; review IRS exemption rules to confirm eligibility.
- Appearing with incomplete documentation: Missing income records or supporting paperwork may delay processing. Please bring all required forms, statements, and payment records to the appointment.
- Confusing Form 1040-C with the annual return: The departure form does not replace Form 1040 or Form 1040-NR; taxpayers must still file a regular return after the tax year ends.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After filing IRS Form 1040-C (2021), the IRS reviews taxable income, income taxes paid, income tax returns filed, and any outstanding tax liabilities to determine eligibility for a tax clearance certificate. Suppose the tax computation indicates additional amounts are due. In that case, the taxpayer must make a payment or provide documents showing tax withheld, estimated tax payments, or other information demonstrating compliance with income tax laws. Once all tax obligations are resolved and the account is cleared, the IRS issues the certificate or sailing permit required for departing aliens.
FAQs
Who must file IRS Form 1040-C (2021)?
Departing aliens must file IRS Form 1040-C (2021) if they received taxable income during the current year and must settle tax obligations before leaving the country. The IRS reviews income taxes paid, income tax returns filed, and any outstanding tax liabilities before issuing a tax clearance certificate.
What documents are needed to obtain a tax clearance certificate?
A taxpayer must present documents showing taxable income, tax withheld, estimated tax payments, and income tax returns filed for the past two years or the preceding year. Bank records from banking institutions, an alien registration card, a social security card, and an airline ticket may also be required for verification.
How does the IRS determine whether taxes are fully paid?
The IRS conducts a tax computation using income, deductions, business expenses, and information indicating capital assets or wages. The area director reviews documents showing tax paid, canceled checks, and other documents to confirm compliance under income tax laws before a sailing permit or departure permit is issued.
Are nonresident aliens and resident aliens treated differently when filing?
Resident aliens and nonresident aliens may follow different rules depending on taxable income, dependents claimed, special tax treaty benefits, and employment activities. Each taxpayer must provide a taxpayer identification number or individual taxpayer identification number and follow the IRS's instructions to meet compliance requirements for the tax year.
What happens if a taxpayer has unpaid taxes at the IRS office?
If outstanding tax liabilities are identified during the filing process, the taxpayer must make a payment or provide a bond guaranteeing payment before a certificate can be issued. The IRS may request additional documents to verify income, official services, fellowship grants, or business activities, to determine whether the taxpayer may be eligible to avoid paying required taxes.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
