Form 1040-C: U.S. Departing Alien Income Tax Return (2021)
What Form 1040-C Is For
Form 1040-C, officially known as the U.S. Departing Alien Income Tax Return, is a specialized tax document that non-U.S. citizens (referred to as "aliens" in tax law) must file before leaving the United States or any U.S. territory. Think of it as a pre-departure tax checkpoint rather than a traditional annual tax return.
The form serves two main purposes: it allows departing aliens to report all income they've received or expect to receive for the entire tax year, and it requires them to pay any expected tax liability on that income. When properly filed and processed, the IRS issues a Certificate of Compliance—commonly called a "sailing permit" or "departure permit"—which certifies that the departing individual has satisfied their U.S. tax obligations according to available information.
It's crucial to understand that Form 1040-C is not your final income tax return for the year. You'll still need to file your regular annual return (Form 1040, 1040-SR, or 1040-NR, depending on your status) after the tax year ends. Any tax you pay with Form 1040-C gets credited toward your total tax liability when you file that final return.
When You'd Use Form 1040-C (Including Late/Amended Filing)
You must file Form 1040-C before you leave the United States—specifically, at least 2 weeks before your departure date but no earlier than 30 days before you plan to leave. The IRS requires you to make an appointment at a local Taxpayer Assistance Center (TAC) by calling 844-545-5640 during business hours. You must appear in person at this appointment; the form cannot be filed electronically or by mail in this context.
If both you and your spouse are aliens and both of you are leaving the country together, both must attend the IRS appointment. The timing requirement is strict: filing too late could delay your travel plans, while applying too early (more than 30 days in advance) means the IRS won't process your request.
Regarding late or amended filings, the IRS instructions don't provide for these scenarios in the traditional sense because the form must be filed before departure as a prerequisite for leaving the country legally with your tax affairs in order. If you've already left without filing Form 1040-C when you should have, you'll need to contact the IRS directly to resolve your compliance status. The focus is on timely pre-departure filing rather than corrections after the fact.
Key Rules or Details for 2021
Several important exceptions mean that not every departing alien needs to file Form 1040-C. You're exempt from filing if you fall into specific categories, including:
- Representatives of foreign governments holding diplomatic passports and their immediate household members
- Students, industrial trainees, or exchange visitors on F-1, F-2, H-3, H-4, J-1, J-2, or Q visas who receive only certain types of exempt income
- Students on M-1 or M-2 visas with only authorized employment income or certain interest income
- Visitors on pleasure trips (B-2 visa) or business trips (B-1 or B-1/B-2 visa) staying fewer than 90 days
- Canadian or Mexican residents who commute frequently to work in the U.S. with wages subject to withholding
- Military trainees under Department of Defense orders
However, these exceptions have specific conditions. For instance, if the IRS Area Director believes you had taxable income and your departure would hinder tax collection, the exception may not apply.
Form 1040-C has three "Groups" based on your tax status. Group I covers resident aliens, Group II covers nonresident aliens with income effectively connected to a U.S. trade or business, and Group III covers nonresident aliens with income not effectively connected to a U.S. business. Your classification determines which tax computation method you'll use and what deductions you can claim.
Step-by-Step (High Level)
Step 1: Determine if you need to file.
Review the exception categories carefully. If none apply to you, you'll need Form 1040-C.
Step 2: Gather your documentation.
You'll need extensive paperwork, including your valid passport with visa or alien registration card, copies of U.S. tax returns for the past two years, receipts for taxes paid, bank records, statements from all employers showing wages and withholding for the current year, proof of estimated tax payments, documents showing property sales, scholarship information (if applicable), any tax treaty documentation, verification of your departure date, and proof of your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Step 3: Make an appointment.
Call the IRS at 844-545-5640 to schedule an in-person appointment at your nearest TAC office, ideally 2-4 weeks before departure.
Step 4: Complete the form.
Fill out Form 1040-C with all income received and reasonably expected through your departure date. You'll need to file an original and one copy.
Step 5: Attend your appointment.
Bring all documentation, pay any tax due (in certified funds such as a cashier's check, certified bank check, money order, or cash), and submit your form with any required prior-year returns that haven't been filed.
Step 6: Receive your Certificate of Compliance.
If everything is in order and taxes are paid or secured, you'll receive your sailing permit, which you should keep for your records and potential presentation at departure.
Step 7: File your annual return.
After the tax year ends, file your regular tax return and claim credit for any tax paid with Form 1040-C.
Common Mistakes and How to Avoid Them
Not filing before departure.
This is the most critical error. Some aliens mistakenly believe they can settle tax matters after leaving. The Certificate of Compliance must be obtained before you depart, so plan ahead and don't wait until the last minute.
Misunderstanding exception categories.
Many people assume they're exempt when they're not, or vice versa. Read the exception requirements carefully—they're quite specific. When in doubt, file Form 1040-C or consult a tax professional.
Insufficient documentation.
Arriving at your IRS appointment without complete records will delay the process. Use the checklist in the instructions and bring everything that applies to your situation, even if you think it might not be necessary.
Failing to pay required taxes.
If you owe tax and the IRS determines your departure might jeopardize collection, you must pay the full amount or post a bond. Come prepared with certified funds to cover any tax liability.
Confusing Form 1040-C with your annual return.
Remember, this form doesn't replace your obligation to file a regular tax return after year-end. Think of it as a down payment and interim report, not your final accounting.
Incorrect resident/nonresident status determination.
Tax residency rules are complex and based on factors like the green card test and substantial presence test, not on your intentions. Review the instructions or Publication 519 carefully, or seek professional help to determine your correct status.
What Happens After You File
Once you've filed Form 1040-C and met all requirements, an IRS Field Assistance Area Director or their representative will sign the Certificate of Compliance section on your form copy. This certificate is your sailing permit, and it allows you to leave the United States with your tax affairs in order.
Important limitations apply to this certificate. It's not a final determination of your tax liability—it simply certifies that based on information available at that moment, you've satisfied your obligations. If the IRS later determines you owe additional tax, you'll still be required to pay it.
For a single departure during the tax year, the certificate typically covers that specific departure. In some cases, if you demonstrate an intention to return and your departure doesn't jeopardize tax collection, the permit may be valid for multiple departures during the year, though the IRS can revoke it for later departures if circumstances change.
Any overpayment shown on Form 1040-C won't be refunded immediately. Instead, you'll receive a refund only when you file your final tax return for the year, and only to the extent that final return shows an overpayment. Conversely, any tax paid with Form 1040-C reduces your liability on your year-end return.
FAQs
Do I need to file Form 1040-C every time I leave the United States?
Generally, yes, unless you fall under an exception category. If you're a frequent traveler, certain circumstances may allow one certificate to cover multiple departures during the tax year, but the IRS retains the right to require a new certificate for subsequent departures if they believe tax collection could be at risk.
What if I'm just a tourist visiting the United States—do I still need this form?
Most tourists don't need Form 1040-C. If you're visiting for pleasure with a B-2 visa, or visiting for business with a B-1 or B-1/B-2 visa and staying fewer than 90 days, you're generally exempt. However, if you received taxable U.S. income during your visit, different rules may apply.
Can I file Form 1040-C electronically or by mail?
No. Form 1040-C must be filed in person at an IRS Taxpayer Assistance Center by appointment. This requirement allows IRS personnel to review your documentation and issue the Certificate of Compliance on the spot.
What happens if I already left the United States without filing Form 1040-C?
This creates a tax compliance issue. You should contact the IRS immediately to address your situation. Depending on your circumstances, you may face difficulties with future entries to the United States and potential penalties. The IRS may work with you to resolve the matter, but it's far better to comply before departure.
If I overpay on Form 1040-C, when will I get my refund?
You won't receive an immediate refund when filing Form 1040-C. Any overpayment will be credited to your account, and you'll receive a refund only after filing your final annual return for the tax year if that return shows you're entitled to one.
I'm a green card holder leaving permanently—what special rules apply?
If you're a lawful permanent resident (green card holder) leaving with no definite plans to return, and you've been a permanent resident for at least 8 of the last 15 tax years, you must notify the Department of Homeland Security about terminating your residency and file Form 8854 (Initial and Annual Expatriation Statement). Special expatriation tax rules may apply, so consult Publication 519 or a tax professional.
What payment methods does the IRS accept for taxes due on Form 1040-C?
The IRS requires certified funds, which include cashier's checks, certified bank checks, postal money orders, or cash. Personal checks typically aren't accepted. Confirm accepted payment methods with your specific TAC office when making your appointment.
Source:
IRS.gov - About Form 1040-C
IRS.gov - Departing Alien Clearance
IRS.gov - Topic 858
