Form 1040-C: U.S. Departing Alien Income Tax Return (2023)
What the Form Is For
Form 1040-C is a specialized tax document that foreign nationals (aliens) must file before leaving the United States or any of its possessions. This form serves two primary purposes: it reports all income you received or reasonably expect to receive during the entire tax year up to your departure date, and it allows you to pay any expected tax liability on that income. When you properly file this form and pay any taxes due, the IRS issues you a certificate of compliance, commonly called a "sailing permit" or "departure permit," which confirms you've met your U.S. tax obligations before departing.
It's crucial to understand that Form 1040-C is not your final annual tax return. After your tax year ends, you must still file your regular annual U.S. income tax return—either Form 1040 if you're a resident alien, or Form 1040-NR if you're a nonresident alien. Any tax you paid with Form 1040-C serves as a credit against your total tax liability when you file that final return. If your Form 1040-C shows an overpayment, you won't receive a refund at departure—you'll need to claim it on your year-end return. IRS.gov
When You’d Use Form 1040-C (Including Late or Amended Filings)
You must file Form 1040-C before you leave the United States, ideally at least two weeks in advance of your departure but no earlier than 30 days before your planned departure date. The IRS requires you to schedule an in-person appointment at your local IRS office by calling 844-545-5640 between 7 a.m. and 7 p.m. local time. Because appointments can fill up during busy periods, don't wait until the last minute.
However, not all departing aliens need to file this form. You're exempt from obtaining a sailing permit if you fall into specific categories, such as: holders of diplomatic passports and their families; students, exchange visitors, or industrial trainees on F-1, F-2, H-3, H-4, J-1, J-2, or Q visas who receive only authorized income; business or pleasure visitors on B-1 or B-2 visas staying less than 90 days; Canadian or Mexican residents who commute frequently to work in the U.S.; or military trainees under Department of Defense orders. Even within these exempt categories, if the IRS believes you had taxable income and your departure would hinder tax collection, you may still need to file.
Some aliens may qualify to file the simpler Form 2063 instead of Form 1040-C. You can use Form 2063 if you've had no taxable income for the current tax year and preceding year, or if you're a resident alien whose departure won't hinder tax collection. If you don't qualify for Form 2063 or fall into an exempt category, you must file Form 1040-C.
There is no specific provision for "late" or "amended" Form 1040-C filings in the traditional sense, because this form must be filed and approved before departure to obtain your sailing permit. If circumstances change after you file (such as receiving additional income before departure), you would need to address this with the IRS before leaving. IRS.gov
Key Rules or Details for 2023
Several important rules govern Form 1040-C that differ from standard tax returns. First, you must report all income received or reasonably expected to be received during the entire tax year—not just income up to the date you file. This forward-looking requirement makes Form 1040-C unique.
Second, your tax residency status determines how you're taxed. The IRS classifies departing aliens into three groups. Group I consists of resident aliens—those who meet the "green card test" (lawful permanent residents) or the "substantial presence test" (physically present in the U.S. for at least 31 days during the current year and 183 days over a three-year period using a weighted formula). Resident aliens are taxed similarly to U.S. citizens at graduated rates on worldwide income. Group II includes nonresident aliens with income effectively connected to a U.S. trade or business, such as wages or self-employment income. This group also pays graduated tax rates. Group III covers nonresident aliens with U.S. source income that's not effectively connected to a U.S. business, such as certain investment income or royalties. This income is typically taxed at a flat 30% rate unless a tax treaty provides a lower rate.
Third, joint filing rules differ from regular returns. Nonresident alien couples cannot file jointly on Form 1040-C. However, if one spouse is a resident alien, they can file jointly if both spouses reasonably expect to qualify for joint filing at year-end and their tax years end simultaneously.
Fourth, payment is generally required when filing. Unless you furnish a bond or the IRS determines your departure won't jeopardize tax collection, you must pay all tax shown as due on Form 1040-C at filing, plus any taxes due for past years. Only after payment will the IRS issue your sailing permit. The permit is valid for all departures during the current year, though the IRS may revoke it for later departures if tax collection appears at risk. IRS.gov
Step-by-Step (High Level)
Completing Form 1040-C involves several sequential steps. Start by gathering comprehensive documentation well before your departure. You'll need your valid passport and alien registration card or visa; copies of U.S. income tax returns filed for the past two years with payment receipts; bank records and receipts documenting deductions, business expenses, and dependents; employer wage statements showing pay and withholding from January 1 to your departure date (or income and expense statements if self-employed); proof of estimated tax payments; documents showing gains or losses from property sales; scholarship or fellowship grant documentation; evidence of any tax treaty benefits you're claiming; verification of your departure date such as an airline ticket; and your Social Security card or ITIN documentation.
Next, determine your tax status. Use the green card test or substantial presence test to establish whether you're a resident or nonresident alien. Review the Group I, II, and III descriptions to identify which category applies to your income situation. If you're married and one spouse is a resident alien, evaluate whether joint filing is appropriate.
When filling out the form, begin with the identification section at the top of page 1, entering your name, identification number (Social Security Number or Individual Taxpayer Identification Number), and passport information. Complete Part I with your explanation of residency status, providing details about how you meet the applicable tests. In Part II, list all dependents with their identifying information and indicate whether each qualifies for the child tax credit or credit for other dependents.
Part III is where you calculate your tax liability. Report all income received and expected to be received during the entire tax year according to your group classification. Group I and II filers use lines 16 through 23, calculating income, adjustments, deductions (itemized or standard), taxable income, and credits. Group III filers use lines 24 and 25 for income taxed at the flat 30% rate (or treaty rate). If you're a nonresident alien with both types of income, complete all relevant sections. Add any other applicable taxes such as self-employment tax, and calculate your total tax liability.
Finally, sign the form—an unsigned Form 1040-C is invalid. Take the completed form and all supporting documentation to your scheduled IRS appointment, pay any tax due, and receive your certificate of compliance. IRS.gov
Common Mistakes and How to Avoid Them
One of the most frequent mistakes is treating Form 1040-C as your final tax return. Remember, this form satisfies your pre-departure tax obligations but doesn't replace your annual return. You must still file Form 1040 or 1040-NR after the tax year ends, using the tax paid with Form 1040-C as a credit.
Another common error is underreporting income. The instructions explicitly require reporting all income received and reasonably expected to be received for the entire year, not just through your departure date. If you anticipate year-end bonuses, investment income, or other earnings, include them in your calculations.
Many filers fail to bring complete documentation to their IRS appointment, causing delays in receiving their sailing permit. Create a comprehensive checklist from the documentation requirements listed above and verify you have everything before your appointment. If you're married and live in a community property state, bring documentation for both spouses regardless of whether both need permits.
Filing-status errors are also prevalent. Nonresident alien couples sometimes attempt to file jointly when it's not permitted. Carefully review the joint filing requirements and only file jointly if one spouse is a resident alien and both conditions are met. Similarly, incorrectly claiming the standard deduction is problematic—dual-status aliens cannot claim it unless they elect to be taxed as resident aliens for the entire year, and you cannot claim it if your spouse itemizes on a separate return.
The timing of your appointment matters. The IRS won't process applications more than 30 days before departure or less than two weeks before, so schedule carefully. Since appointments may be scarce during busy periods, call well in advance to secure a suitable date.
Don't forget the mandatory digital asset question introduced in 2023. You must check either "Yes" or "No" indicating whether you received, sold, exchanged, or otherwise disposed of any digital assets during the year. Leaving this blank is a filing error.
Finally, ensure you obtain a Social Security Number or Individual Taxpayer Identification Number before filing. An ITIN typically takes four to six weeks to receive, so apply early if needed. Remember that an ITIN is solely for tax purposes and doesn't convey social security benefits or affect immigration status. IRS.gov
What Happens After You File
After you file Form 1040-C and pay any required taxes, the IRS will review your documentation and, if everything is in order, immediately issue you a certificate of compliance (your sailing or departure permit). This certificate confirms you've satisfied your U.S. tax obligations based on available information. Keep this certificate safe—you may need to present it when leaving the United States.
The sailing permit is valid for all your departures during the current tax year. However, the IRS retains the right to cancel it for any later departure within that year if they believe your leaving would hinder tax collection or if they discover you had unreported taxable income.
It's essential to understand that receiving a certificate of compliance is not a final determination of your tax liability. If the IRS later determines you owe additional tax—perhaps because you received more income than expected or made calculation errors—you'll still be liable for the difference. The certificate simply means the IRS is satisfied based on the information available at the time of your departure.
During the months after your departure, keep careful records of any additional income received and any life changes that might affect your tax situation. When your tax year ends, you must file your final annual return (Form 1040, 1040-SR, or 1040-NR, depending on your status on the last day of the year). On this return, you'll report your actual total income for the entire year and calculate your accurate tax liability.
The amount you paid with Form 1040-C will appear as a credit against your total tax due on the annual return. If you paid more than your actual tax liability, you'll receive a refund when your annual return is processed. Conversely, if you underpaid—because you earned more than expected or made errors—you'll owe the additional amount and may be subject to interest charges.
If you were a resident alien at the beginning of the tax year but became a nonresident alien by year-end (or vice versa), you'll need to file a ""dual-status"" return, which has special rules. Consult Publication 519 or a tax professional for guidance in this situation.
Green card holders who surrender their status should be aware of potential expatriation tax consequences. If you've been a lawful permanent resident for at least 8 of the previous 15 taxable years and surrender your green card, you must notify the Department of Homeland Security and file Form 8854 (Initial and Annual Expatriation Statement) with your annual return. Special tax rules under section 877A may apply. IRS.gov
FAQs
Can I get my sailing permit without paying the tax shown on Form 1040-C?
Yes, under specific circumstances. If you can demonstrate to the IRS's satisfaction that you intend to return to the United States and that your departure doesn't jeopardize tax collection, you may receive a sailing permit without paying the tax immediately. However, you must still file all required income tax returns and pay any taxes due for previous years. The IRS may also permit you to furnish a bond guaranteeing payment instead of paying immediately. Generally, if you have not received a termination assessment (a demand for immediate payment), the certificate may be issued without payment or bond. These decisions are made on a case-by-case basis by the Field Assistance Area Director.
What's the difference between Form 1040-C and Form 2063, and which should I file?
Form 2063 is a shorter, simpler form that doesn't include a tax computation. You can use Form 2063 if you're an alien (resident or nonresident) who had no taxable income for the current tax year and preceding year, or if you're a resident alien with taxable income whose departure won't hinder tax collection as determined by the Area Director. However, if the IRS has information suggesting you're leaving to avoid paying income tax, you must file Form 1040-C instead. If you don't qualify for Form 2063, you must file the more comprehensive Form 1040-C, which requires full income reporting and tax calculation. Form 2063's sailing permit is valid for all departures during the current year, while Form 1040-C's permit may be limited to the specific departure depending on circumstances.
I'm on an F-1 student visa with only scholarship income and interest from my bank account. Do I still need Form 1040-C?
Probably not. Students, industrial trainees, and exchange visitors on F-1, F-2, H-3, H-4, J-1, J-2, or Q visas are exempt from the sailing permit requirement if they receive only certain types of income: allowances covering study or training expenses (including travel, maintenance, and tuition); the value of services or accommodations related to such study or training; income from employment authorized under U.S. immigration laws; or interest on deposits that's not effectively connected with a U.S. trade or business. Your situation appears to fall within this exception. However, if you received income beyond these categories or if the IRS believes you had taxable income and your departure would hinder collection, you might still need to file. When in doubt, consult with your local IRS office or a tax professional familiar with nonresident alien taxation.
My spouse and I are both nonresident aliens leaving the U.S. together. Can we file a joint Form 1040-C?
No, nonresident alien married couples cannot file joint returns on Form 1040-C. However, if one spouse is a resident alien, you can file jointly if two conditions are met: both of you can reasonably be expected to qualify to file a joint return at the normal close of your tax year, and both spouses' tax years end at the same time. If these conditions apply, both spouses' names, identification numbers, and passport information should be entered on page 1 of the form, and both spouses' income and information must be included throughout the form. If you cannot file jointly, each spouse who needs a sailing permit must file separately.
I filed Form 1040-C three months ago and left the United States. Now I've received unexpected income from my former U.S. employer. What do I do?
The tax you paid with Form 1040-C was a prepayment based on income received or expected through your departure date. Since you've received additional U.S. source income after filing, you must report this income on your annual U.S. income tax return (Form 1040-NR or Form 1040, depending on your residency status on the last day of the tax year). When you file your year-end return, include all income for the entire year—both what you reported on Form 1040-C and the new income. Calculate your total tax liability for the year, then claim the amount you paid with Form 1040-C as a credit. If your total payments (including what you paid with Form 1040-C, any withholding, and estimated tax payments) exceed your actual tax liability, you'll receive a refund. If you underpaid, you'll owe the difference plus any applicable interest.
I have a green card but am leaving the U.S. permanently to return to my home country. Are there special requirements I need to know about?
Yes. As a green card holder (lawful permanent resident) leaving permanently, you must obtain a sailing permit like other departing aliens. However, if you've held permanent resident status for at least 8 of the previous 15 taxable years (including the year you surrender your green card), you must also notify the Department of Homeland Security of your termination of residency and file Form 8854 (Initial and Annual Expatriation Statement) with the IRS. You may be subject to special expatriation tax rules under section 877A, which can include tax on the net unrealized gain on your property as if it had been sold the day before your expatriation date. This tax is calculated on Form 8854. Because expatriation tax rules are complex and can have significant consequences, consult Publication 519 and consider seeking advice from a tax professional experienced in expatriation matters before surrendering your green card.
Where can I find more detailed information about my specific situation as a departing alien?
The most comprehensive official resource is IRS Publication 519, "U.S. Tax Guide for Aliens," which provides detailed information about determining your tax status, understanding income taxation for aliens, and navigating special situations. You can download it from IRS.gov/pub/irs-pdf/p519.pdf. Additionally, the instructions for Form 1040-NR (if you're a nonresident alien) or Form 1040 (if you're a resident alien) contain helpful guidance for completing Form 1040-C. For complex situations—such as dual-status years, expatriation, significant self-employment income, or treaty claims—consider consulting a tax professional experienced in international taxation. The IRS also offers assistance through local Taxpayer Assistance Centers, though remember that appointments are required and should be scheduled well in advance of your departure.
This summary is based on authoritative IRS sources including Form 1040-C instructions (Rev. January 2023), IRS.gov guidance pages, and related publications current for the 2023 tax year.
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