IRS Form 1040-C (2018): U.S. Departing Alien Tax Return

What Form 1040-C Is For

Form 1040-C allows the Internal Revenue Service to confirm that departing nonresident aliens and resident aliens have met their U.S. income tax obligations before travel. It requires you to report income received and income expected for the entire tax year, including wages, income tax withholding, and other taxable amounts shown by an employer showing wages paid. The IRS uses this information to review the tax computation, the tax shown, and your expected tax liability.

Form 1040-C may be required when obtaining a sailing or departure permit, including for a lawful permanent resident, a military trainee admitted for instruction, or someone traveling for a business trip or official services for a foreign government. The IRS also considers filings from the preceding tax year, any special tax treaty benefits, your individual taxpayer identification number, and whether a bond agreement is necessary.

When You’d Use Form 1040-C

You use Form 1040-C when the IRS needs to verify that you’ve met your U.S. income tax obligations before you leave the country. It applies in situations such as:

• Permanent moves or long-term travel when you do not plan to return soon
• Relocation for work or family reasons, whether you are a resident alien or a nonresident alien with U.S.-source income
  
  
• Departure after receiving taxable income, including wages, self-employment income, or income effectively connected to a U.S. trade or business
  
  
• Travel requiring a departure permit, such as when the IRS decides you are required to obtain a sailing permit

Some people do not need the form, including:

• Short-term visitors
• Exchange visitors and students
• Commuters and individuals with diplomatic status

Form 1040-C must be filed in person at a local IRS office. If you leave without filing when required, you may need to address missed filings with the IRS after your departure.

Key Rules or Details for 2017

Several key rules apply when filing Form 1040-C for the 2017 tax year:

• Purpose of the form: The Internal Revenue Service uses Form 1040-C to review your U.S. tax obligations before you leave the country.
  
  
• Income reporting requirements: You must report income received and income you expect to receive through your departure date, including wages, business expenses, capital assets, and other taxable income tied to a U.S. trade or business.
  
  
• Filer groups:
  
  
  
  • Group I: Resident aliens reporting worldwide income
    
    
  • Group II: Nonresident aliens with effectively connected income
    
    
  • Group III: Nonresident aliens with U.S. source income that are not effectively connected
    
    
• Required documents: Bring an alien registration card, bank records, employer wage information, and income tax returns from the preceding year.
  
  
• Additional rules: Spouses must appear together, and the IRS may request estimated tax payments or a bond guaranteeing payment.

Learn how penalty abatement may apply when late filings, withholding errors, or unreported income create penalties that must be resolved before leaving the United States.

Step-by-Step (High Level)

Step 1: Schedule the IRS Appointment

Contact a local IRS office or Taxpayer Assistance Center that handles alien clearance. Schedule your visit at least two weeks before your departure date to allow sufficient time to gather the necessary documents and address any questions.

Step 2: Gather Required Documents

Bring your passport, visa, or alien registration card, plus any taxpayer identification number or individual taxpayer identification number. Collect income tax returns filed for the preceding tax year, bank records, employer records showing wages paid, and other records of income received and business expenses.

Step 3: Complete IRS Form 1040-C (2018)

With these records, report the income received and the expected taxable income for the entire tax year through the date of departure. Use the form to calculate expected tax liability and tax shown, considering tax withheld and estimated tax payments.

Step 4: Attend the Appointment and Pay Any Tax Due

At the appointment, submit Form 1040-C, supporting documents, and any unpaid tax liability. You may also discuss a bond guaranteeing payment if the Internal Revenue Service believes paying taxes later could be difficult.

Step 5: Receive the Departure Permit or Sailing Permit

If everything is in order, the IRS issues a certificate of compliance, also known as a sailing or departure permit. Keep this document with your travel papers, along with copies of Form 1040-C and related records.

Common Mistakes and How to Avoid Them

Many people encounter preventable issues when preparing Form 1040-C, which can slow down the departure permit process. The points below outline common mistakes and practical ways to avoid them:

• Scheduling the appointment too late: Appointments at a local IRS office can fill quickly, especially during peak travel seasons. Schedule your visit two to four weeks before your departure date to ensure availability.
• Bringing incomplete documentation: Missing items such as bank records, employer statements showing wages paid, income tax returns filed for the preceding tax year, or your taxpayer identification number can slow the process. Create a checklist and gather all documents at least a week before your appointment.
• Forgetting to report income expected through the end of the tax year. Some people only report income received so far, not income still expected to be received in the future. Review upcoming wages, business expenses, and any income tied to a U.S. trade or business so your tax calculation reflects your full expected tax liability.
• Assuming Form 1040-C replaces your annual tax return: Filing Form 1040-C does not replace filing a Form 1040 or Form 1040-NR. Add a reminder to your calendar to submit your full-year return after the tax year ends.
• Not having both spouses appear when required: Couples required to obtain a departure permit must attend together. Verify the requirements in advance to help prevent any need for rescheduling or delays at the IRS office.

Learn how an IRS bank levy may occur if your Form 1040-C review identifies unpaid tax and no arrangement is made before departure.

FAQs

Do resident aliens always need Form 1040-C before leaving the United States?

Resident aliens may need Form 1040-C if they have U.S. income and are required to obtain a departure permit before travel. Learn how Form 2848 allows a representative to manage communications with the IRS on your behalf during the departure-permit process.

Are nonresident aliens required to file Form 1040-C if they have limited U.S.-source income?

Nonresident aliens may need to complete the form when they receive taxable income that falls within the IRS filing requirements for individuals departing the United States.

Does filing Form 1040-C replace my regular income tax returns for the year?

Form 1040-C does not replace your annual income tax returns, which must still be filed for the whole tax year.

What should I do if I disagree with the tax calculation while paying taxes at the appointment?

You can provide documents to the IRS examiner and may pay the disputed amount or request approval for a bond guaranteeing payment.

Is everyone departing the United States required to obtain a sailing permit?

Only certain individuals with U.S. income or specific filing requirements are required to obtain a sailing permit before leaving.