Form 1040-C Filing Checklist for Tax Year 2023
Overview and Purpose
Form 1040-C is the U.S. Departing Alien Income Tax Return filed by aliens leaving the United States or its territories to certify tax compliance before departure. This form serves as a preliminary income tax return covering income received or expected to be received from January 1, 2023, through the departure date. Unlike standard tax forms, Form 1040-C must be filed in person at an IRS Taxpayer Assistance Center, with no electronic filing option available.
The form produces a Certificate of Compliance, commonly known as a sailing permit or departure permit, which authorizes departure from the United States. This certificate confirms that the taxpayer has satisfied all known U.S. tax obligations as of the date of departure, but does not constitute a final determination of tax liability. After the tax year ends, departing aliens must still file their final annual return on Form 1040, Form 1040-SR, or Form 1040-NR, depending on their year-end status.
Key 2023 Tax Year Context
For tax year 2023, Form 1040-C incorporates updated threshold amounts reflecting inflation adjustments. Standard deduction amounts are $12,950 for single filers, $25,900 for married filing jointly, $19,400 for head of household, and $12,950 for married filing separately.
Alternative Minimum Tax exemption amounts are $81,300 for single filers, $126,500 for married filing jointly, and $63,250 for married filing separately, with phase-out thresholds at $578,150 for single filers and married filing separately, and $1,156,300 for married filing jointly. The maximum earned income subject to Social Security tax in 2023 is $160,200.
The form organizes taxpayers into three groups based on residency status and income type. Group I includes resident aliens reporting worldwide income. Group II includes nonresident aliens with income effectively connected to a U.S. trade or business. Group III includes nonresident aliens with fixed, determinable, annual, or periodic income not effectively connected to a U.S. trade or business, which is taxed at a flat 30 percent rate or a lower treaty rate.
Ten-Step Filing Process
Step 1: Determine Alien Status Classification
Establish whether you are a resident alien or a nonresident alien for 2023. You qualify as a resident alien if you meet either the green card test or the substantial presence test. The green card test is satisfied if you were a lawful permanent resident at any time during 2023, even if that status is later abandoned.
The substantial presence test requires physical presence in the United States for at least 31 days during 2023 and 183 days or more during the three years, including 2023, 2022, and 2021. Count all days present in 2023, one-third of the days present in 2022, and one-sixth of the days present in 2021.
Certain days are excluded from this calculation, including days when you were an exempt individual, such as a foreign government official, teacher, or trainee on a J or Q visa, student on an F, J, M, or Q visa, or professional athlete competing in a charitable event.
Days when you were unable to leave due to a medical condition that developed while in the United States are also excluded if you file Form 8843 documenting the medical emergency. Additionally excluded are days spent commuting from Canada or Mexico, days in transit between two foreign locations for less than 24 hours, and days as a crew member on a foreign vessel.
If you meet the substantial presence test but were present fewer than 183 days during 2023, maintained a tax home in a foreign country, and had a closer connection to that foreign country than to the United States, you may claim the closer connection exception by filing Form 8840 with your final income tax return.
Step 2: Verify Exemption from Filing Requirement
Determine whether you qualify for an exemption from filing Form 1040-C. Foreign government representatives holding diplomatic passports, members of their households, and their servants are exempt. Employees of international organizations or foreign governments whose compensation for official services is exempt from U.S. tax and who received no other U.S. source income are exempt, along with members of their households who received no U.S. source income.
Students, trainees, or exchange visitors with F-1, F-2, H-3, H-4, J-1, J-2, or Q visas, along with their spouses and children, may not have to pay taxes if they only earned money from allowed jobs and a particular interest on bank deposits that are not related to a U.S. business. Business or pleasure visitors on B-1 or B-2 visas who remain in the United States for 90 days or less qualify for exemption. Canadian or Mexican residents who regularly commute to work in the U.S. are exempt.
However, if the IRS has information indicating you are leaving to avoid paying income tax or had unreported taxable income, you must file Form 1040-C despite qualifying for an exemption.
Step 3: Determine Eligibility for Form 2063 Alternative
Consider whether you qualify to file Form 2063 instead of Form 1040-C. Form 2063 is a simplified alternative available only to aliens who had no taxable income for 2023 up to and including the departure date and for 2022 if the filing period for that year has not expired.
Resident aliens who received taxable income during 2023 or 2022 but whose departure will not hinder tax collection, as determined by the IRS Area Director, may also qualify. Form 2063 does not include a tax computation and is substantially shorter than Form 1040-C.
Step 4: Schedule In-Person Appointment
Contact the IRS to schedule an appointment at your local IRS Taxpayer Assistance Center. Schedule the appointment at least two weeks before your planned departure date, but no more than 30 days in advance. The availability of appointments within the required timeframe may be limited, depending on the time of year and office workload, so it’s advisable to schedule as early as possible.
An in-person interview is required. If you are married and living with a spouse who is also an alien, both spouses must attend the IRS office together. If you are married and reside in a community property state, bring documents for your spouse regardless of whether the spouse requires a certificate of compliance.
Step 5: Gather Identity and Immigration Documents
Assemble your valid passport showing your alien registration card or visa. If you have a re-entry permit and plan to return to the United States, include proof of that permit. Document your date of first arrival in the United States and your date of last arrival, if applicable.
Provide your complete foreign address where you will reside after departure. Have your taxpayer identification number documented, either your Social Security Number or Individual Taxpayer Identification Number.
Step 6: Compile Prior Returns and Payment Records
Collect copies of your U.S. tax returns for the past two years. If you have been in the United States for less than two years, bring all returns filed during your time in the country.
Gather receipts and documentation showing all income taxes paid on those returns. Include receipts for any estimated tax payments made in prior years and in 2023 through your departure date. Compile bank statements or other records proving payment of taxes.
Step 7: Collect All 2023 Income Documentation
Gather all Forms 1099 received for 2023 income, including Forms 1099-NEC for nonemployee compensation, 1099-INT for interest, 1099-DIV for dividends, 1099-B for broker transactions, 1099-K for payment card transactions, and any other information returns.
Obtain a statement from each employer showing 2023 wages paid and tax withheld from January 1 through your departure date. If you are self-employed, prepare a complete statement of income and expenses from January 1, 2023, through your planned departure date.
Include records of rental income, interest, dividends, capital gains, or other income received or expected to be received before departure. Document all income with supporting records such as bank statements, invoices, payment receipts, and contracts.
Step 8: Document Deductions and Business Expenses
If you are a resident alien classified as Group I, gather receipts, bank records, canceled checks, and statements proving all deductions claimed. If you operate a business, prepare Schedule C to report your net profit or loss through your departure date.
Document all business expenses by category, including advertising, vehicle expenses, commissions, contract labor, depreciation, insurance, interest, legal and professional services, office expenses, rent, repairs, supplies, taxes, travel and meals, utilities, and wages.
If you reported capital gains or losses from property sales, provide documents showing the date acquired, the date sold, the purchase price, and the sale price. Include Form 8949 for sales and dispositions of capital assets. Attach Form 4562 if claiming depreciation on business assets.
If you claim home office expenses, prepare Form 8829 using the actual expense method or calculate the simplified method based on square footage.
For vehicle expenses, maintain detailed records including the date the vehicle was placed in service, total business miles driven during 2023, commuting miles, other personal miles, and written evidence supporting the claimed deduction, such as a mileage log or vehicle expense diary.
Step 9: Collect Dependent and Treaty Documentation
If you claim any dependents on Form 1040-C, gather their Social Security Numbers or Individual Taxpayer Identification Numbers. Provide receipts, bank records, or other documents proving you furnished more than half their support in 2023 through your departure date.
ITINs expire December 31, 2025, if not used on at least one tax return filed in the three consecutive tax years 2020, 2021, or 2022.
If you received scholarship or fellowship grants, bring verification of the grantor, source, and purpose. Include copies of the grant application and approval letter, a statement showing the amount paid and your duties and obligations, and a list of any previous grants.
If you claim eligibility for reduced withholding or other benefits under a U.S. income tax treaty with your country of residence, bring documentation supporting your treaty claim. This may include Form W-8BEN and detailed explanations of how treaty provisions apply to your specific circumstances.
Step 10: Calculate Tax and Prepare Payment
Calculate your tax liability based on your classification. Group I resident aliens use the 2023 tax rate schedules, which range from 10 percent to 37 percent, depending on taxable income and filing status.
Apply the standard deduction of $12,950 for single or married filing separately, $25,900 for married filing jointly, or $19,400 for head of household if you do not itemize. Alternatively, claim itemized deductions if they exceed the standard deduction amount.
Group II nonresident aliens with income effectively connected to a U.S. trade or business also use graduated tax rate schedules, but may claim only limited deductions connected to that income. Group III nonresident aliens with fixed, determinable, annual, or periodic income not effectively connected to a U.S. trade or business pay a flat 30 percent tax on total income unless a tax treaty provides a lower rate.
Bring payment in certified funds, such as a cashier’s check, a certified bank check, a postal money order, or cash, for all taxes shown as due on Form 1040-C. Include payment for any taxes owed for prior years. The certificate of compliance will be issued when all taxes are paid in full, or a bond will be posted if the IRS determines that your departure will not jeopardize collection.
Special Considerations and Requirements
Credits and Deductions
Group I resident aliens may claim the same credits available on Form 1040, which include the $2,000 child tax credit for each qualifying child with a valid Social Security Number, the credit for other dependents, the earned income tax credit if eligible, education credits, and the retirement savings contributions credit.
However, resident aliens who exclude foreign-earned income are not eligible to claim the additional child tax credit.
The qualified business income deduction allows eligible taxpayers to deduct up to 20 percent of qualified business income from domestic businesses operated as sole proprietorships or partnerships. This deduction is available regardless of whether you itemize deductions and is subject to limitations based on the type of business, W-2 wages paid, and the unadjusted basis of qualified property—complete Form 8995 or Form 8995-A to calculate this deduction.
Self-Employment Tax
Self-employed individuals must calculate self-employment tax using Schedule SE. The self-employment tax rate for 2023 is 15.3 percent on net self-employment income up to $160,200, consisting of 12.4 percent for Social Security and 2.9 percent for Medicare.
An additional 0.9 percent Medicare tax applies to individuals with high incomes. Self-employed individuals may deduct one-half of the self-employment tax paid as an adjustment to income.
Alternative Minimum Tax
If your tentative minimum tax exceeds your regular tax, you must pay AMT in addition to regular tax. The 2023 AMT exemption amounts are $81,300 for single filers $126,500 for married filing jointly, and $63,250 for married filing separately. These exemptions phase out at $578,150 for single filers and married filers filing individually and $1,156,300 for married filers filing jointly.
Filing the Form and Obtaining a Certificate
File the original Form 1040-C and one copy at your IRS Taxpayer Assistance Center appointment. The IRS official will sign the Certificate of Compliance section after reviewing your filing and verifying that all taxes have been paid.
This certificate certifies that your U.S. tax obligations have been satisfied, allowing you to depart during 2023, unless they are subsequently revoked. The certificate is only applicable to departures made during the current tax year.
Remember that Form 1040-C is not your final income tax return. After December 31, 2023, you must file your annual return on the appropriate form, based on your status as of that date. Any tax paid with Form 1040-C counts as a credit against your final tax liability, and any overpayment is refunded only to the extent your final return shows an overall overpayment.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
