IRS Form 1040-C (2014): U.S. Departing Alien Tax Return

What Form 1040-C Is For

Form 1040-C (2014) helps the IRS confirm that you have met your federal tax obligations before leaving the United States. It reports the income you earned or received as taxable income during the year and allows the IRS to review any estimated tax payments made under income tax laws. 

The form also verifies your identity through a taxpayer identification number or individual taxpayer identification number, along with bank records or other documents indicating income. Resident aliens report worldwide income, while nonresidents report only U.S.-source income. The IRS reviews your tax computation and then issues a sailing permit required for departure.

When You’d Use Form 1040-C

You use Form 1040-C when you plan to leave the United States and need to show the IRS that your 2014 tax obligations are up to date. You may need the form in the following situations:

• Before any departure from the U.S.: You must file Form 1040-C no earlier than 30 days before you leave and no later than two weeks before departure. This timing allows the IRS enough time to review your tax information. Review our CP504 Notice guide for details on IRS enforcement actions that can affect departing taxpayers who owe U.S. tax.
• If you leave between January 1 and April 15: You must file your prior year’s tax return before the IRS can issue a sailing permit. Filing both returns ensures the IRS has complete tax records for your departure.
• If you leave more than once in 2014: A second filing may be required if your original sailing permit is no longer valid. The IRS uses the updated filing to confirm your current tax status.
• If you qualify for a shorter process: Some individuals may use Form 2063 instead of Form 1040-C when little or no tax is due. This option provides a simplified review for qualifying taxpayers.

Key Rules or Details for 2014

Several rules apply when completing Form 1040-C for the 2014 tax year. These guidelines help the IRS determine how much tax you may owe before leaving the United States:

• Residency status matters:
  
  
  
  • Resident aliens must report their worldwide income, and they follow the same filing rules as U.S. citizens.
    
    
  • Nonresident aliens report only U.S. income and must separate it into effectively connected and non-effectively connected categories.
    
    
• Visa exemptions apply: Individuals in specific categories, such as diplomats, student-athletes, exchange visitors, short-term business visitors, and Canadian or Mexican commuters, may be exempt from visa requirements.
  
  
• Tax payment is usually required: Most departing individuals must pay the tax shown on Form 1040-C during the IRS appointment. In some cases, the IRS may accept a bond or other assurance as an alternative to immediate payment.
  
  
• Treaty benefits may reduce your tax:  If a tax treaty lowers your rate on specific income, you must document the claim and may need to file Form 8833.
  
  
• Long-term green card holders have additional rules: Some individuals who relinquish their green card may be required to file Form 8854 and comply with expatriation tax rules.

Step-by-Step (High Level)

1. Confirm that you must file

Review your visa status, income, and any exemptions. Some students, certain diplomats with diplomatic passports, and military trainees admitted under specific programs may be exempt; however, most travelers with wages paid or other gross income are required to file a tax return. Anyone claiming special tax treaty benefits should bring supporting documents.

2. Gather the documents you’ll need

Gather your alien registration card, income statement, and income tax returns filed for the preceding year. Bring proof of income taxes paid, tax withheld, and any business expenses or office expenses if you ran a sole proprietorship. 

Self-employed individuals should include gross receipts, capital assets, and records of business expenses, including travel. Add documents for pension plans, personal property, or fuel tax credits. Fellowship recipients with employment authorization under immigration laws should bring those records.

3. Schedule an appointment with the IRS

Contact a local IRS office and request a sailing permit appointment, bringing your identification and airline ticket.

4. Complete the form

List residency details and dependents claimed, and calculate tax using your income tax withholding, withholding tax, or business totals on your filing schedule.

5. Pay any tax due or provide security

Most taxpayers are required to pay at the time of the appointment; however, the IRS may allow a bond guaranteeing payment in certain circumstances.

6. Receive your certificate of compliance

The IRS will issue your sailing permit, which you must keep with your travel documents when departing the United States.

Common Mistakes and How to Avoid Them

Filing Form 1040-C for 2014 can feel overwhelming, and many delays come from simple oversights. These points can help you avoid common issues:

• Treating Form 1040-C as Your Final Return: Form 1040-C only covers your estimated 2014 taxes. You must still file Form 1040 or Form 1040-NR by the end of the year.
• Waiting Too Long to Schedule Your IRS Appointment: You must file at least two weeks before departure, and the sailing permit cannot be issued more than 30 days early. Scheduling too late can reduce your filing window.
• Misclassifying Income Types: The rules for resident and nonresident income differ, and incorrectly separating effectively connected and non-effectively connected income can lead to errors. Review each income source carefully to ensure the correct classification is applied.
• Arriving Without Complete Documentation: Missing wage records, tax payments, or passport information can delay your sailing permit. Bring all supporting documents to ensure the IRS can complete the review.
• Assuming a Past Exemption Still Applies: Your income or visa category may have changed since your last departure. Reconfirm your filing requirements to avoid relying on outdated exemptions.

Explore payment plan options for taxpayers who cannot pay their estimated 2014 tax liability during their IRS appointment.

What Happens After You File

After you submit Form 1040-C and the required documents, the IRS reviews everything during your appointment. If your records are complete and you have paid any tax due, the IRS issues a certificate of compliance, also known as a sailing permit. This confirms your 2014 tax obligations are current. Some permits apply to one departure, while others cover multiple trips. 

You must still file your regular 2014 tax return after leaving the United States. Learn how Form 2848 enables a representative to assist with your departure permit process and IRS correspondence.

FAQs

Do I need a departure permit before leaving the United States?

Most travelers who earn an income during the year are required to obtain a departure permit before their scheduled departure date.

What documents should I bring to the IRS appointment?

Bring an alien registration card, a document from your employer showing wages paid, and any document verifying your income.

Where do I file Form 1040-C?

You must appear in person at a local IRS office or another designated IRS office.

How does the IRS verify my income?

The IRS reviews your gross income, income taxes paid, and income tax returns filed for the preceding tax year.

Can I reduce my tax using a treaty?

Some taxpayers may be eligible for special tax treaty benefits offered by a foreign government.