Form 1040-C: The departing alien income tax return explained (2026)
Form 1040-C is the IRS form that resident and nonresident aliens must file before leaving the United States – it reports income earned during the tax year up to the departure date and is required to obtain a sailing permit, also called a certificate of compliance.
Form 1040-C is not a substitute for the annual Form 1040 or Form 1040-NR – it is a pre-departure tax clearance document required by the IRS.
The official title of the form is the US Departing Alien Income Tax Return.
It covers a single purpose: reporting the income you received or expect to receive from January 1 through your planned departure date, calculating the tax due on that income, and paying it before you leave. (If you’re requesting a permit without paying tax because you intend to return to the US, you’ll instead need to report your expected income for the entire year of departure.)
The 1040-C form is a federal requirement under Internal Revenue Code section 6851, which requires most departing aliens to obtain a certificate of compliance before leaving the United States. Filing it does not close out your US tax obligations for the year – you must still file a final annual return after December 31.
Think of the 1040-C tax form’s purpose as a checkpoint. The IRS wants to confirm that a departing alien has accounted for their US tax liability before they are outside the country’s jurisdiction.
Once the IRS accepts your Form 1040-C and you pay any tax due, you receive a certificate of compliance – commonly called a sailing permit – that clears you to depart.
Who must file Form 1040-C before leaving the US?
Most aliens departing the US are required to obtain a sailing permit from the IRS before their departure date.
The filing requirement applies broadly to three categories of aliens:
- Resident aliens departing permanently – This includes green card holders and anyone who meets the substantial presence test. If you are leaving the US with no plan to return as a resident, you must file Form 1040-C.
- Nonresident aliens with US-source income – If you earned wages, rental income, investment income, or any other US-source income during the year, you must file before departing. This is true even if your total income is relatively small.
- Dual-status aliens – If you changed from resident to nonresident status – or the reverse – during the tax year, you fall into this category. The Form 1040-C departing alien rules apply to you based on whichever status you held at the time of departure.
The requirement also applies if you are leaving US territories, not just the 50 states. The IRS instructions for Form 1040-C list specific visa types, income thresholds, and residency tests that determine which category applies to you.
Exceptions: Who does NOT need to file Form 1040-C?
Not every departing alien needs to go through the Form 1040-C process. The IRS provides several exceptions:
- Diplomats, certain international organization employees, and their household members – This exception covers a foreign government representative holding a diplomatic passport, an international organization or foreign government employee whose official-service pay is exempt from US tax with no other US-source income, and each one’s accompanying household members or servants not paid from US sources. These individuals are exempt from the sailing permit requirement.
- Certain students and exchange visitors do not need to file. Aliens on F-1, F-2, H-3, H-4, J-1, J-2, Q-1, Q-2, or Q-3 visas qualify if their only US-source income is allowances covering study or training expenses, the value of furnished services or accommodations incident to that study or training, authorized employment income, or certain bank interest. Aliens on M-1 or M-2 visas qualify under a narrower exception: only authorized employment income or certain bank interest, with no allowance carve-out.
- Short-stay business and pleasure visitors – Aliens on a B-2 (pleasure) visa are exempt regardless of length of stay. Aliens on a B-1 or combined B-1/B-2 (business) visa, or present under Visa Waiver, are exempt if they do not stay in the US or its territories more than 90 days during the tax year.
- Canadian and Mexican border commuters – Those who commute to the US for work and have tax properly withheld from their wages.
Additional exemptions, including military trainees on official Department of Defense travel orders, transit passengers, and border-crossing cardholders, apply under the IRS instructions for Form 1040-C but cover less common situations.
Form 1040-C vs. Form 1040-NR vs. Form 2063: Key differences
Filing Form 1040-C does NOT eliminate the obligation to file a final annual return on Form 1040 or Form 1040-NR after the tax year ends.
These three forms serve different purposes and are filed at different times. Understanding which ones apply to you prevents missed filings and unnecessary penalties.
| Form 1040-C | Form 1040-NR | Form 2063 | |
|---|---|---|---|
| Purpose | Pre-departure tax clearance | Annual nonresident alien income tax return | Simplified pre-departure tax statement |
| Who files | Resident and nonresident aliens leaving the US | Nonresident aliens with US-source income | Aliens with no taxable income for the current and prior year, or resident aliens whose departure will not hinder tax collection |
| When filed | Before departing the US – between 2 weeks and 30 days before departure | After the tax year ends – standard filing deadline | Before departing the US – same timing as Form 1040-C |
| Replaces the annual return? | No – a final Form 1040 or Form 1040-NR is still required | N/A – this IS the annual return | No – but filers with no taxable income may have no annual return obligation |
The 1040-C tax form is the pre-departure clearance document. Form 2063 is the simpler alternative, available to those with no taxable income in either the current year or the prior year, and to resident aliens with taxable income whose departure the IRS determines will not hinder collection of the tax.
If you had any taxable income during the year, regardless of source, Form 2063 is generally not an option; you must file Form 1040-C, unless you are a resident alien and the IRS determines your departure will not hinder collection of the tax.
When to file Form 1040-C: Deadlines and timing rules
The IRS requires you to appear in person at an IRS office to file Form 1040-C and obtain your sailing permit before you leave the United States.
There is no electronic filing option for Form 1040-C. You must visit an IRS Taxpayer Assistance Center in person, by appointment only.
The timing rules work as follows:
- Schedule your appointment between 2 weeks and 30 days before your planned departure date. The IRS recommends filing no later than 2 weeks before departure, and no earlier than 30 days before. Filing too early may mean your income figures are not yet final; filing too late risks not receiving your sailing permit in time.
- Call the IRS to book your appointment. The TAC appointment line is 844-545-5640, available 7 a.m. to 7 p.m. local time. Walk-ins are not accepted.
- Most sailing permits, whether issued with Form 1040-C or Form 2063, cover all of your departures during that tax year. The IRS can cancel the permit for a later departure if it believes tax collection would be jeopardized. The narrower exception applies to a Form 1040-C permit issued when the IRS lets you post a bond instead of paying the tax shown due – that permit covers only the specific departure for which it was issued.
The 2-week-to-30-day window is a general guideline. During peak filing season or in cities with high demand, IRS appointment availability can be limited.
The IRS Form 1040-C process takes time – do not wait until the week before your flight.
What income must be reported on Form 1040-C?
Form 1040-C requires you to report your income for the period from January 1 through your expected departure date; the scope depends on your alien status, as explained below, including amounts accrued but not yet received.
The scope of income reported depends on your status:
- Resident aliens report worldwide income – the same categories you would report on a regular Form 1040. This includes wages, salaries, self-employment income, rental income, interest, dividends, capital gains, and any other income from any source.
- Nonresident aliens report only income effectively connected with a US trade or business – taxed at graduated rates – and other US-source income such as dividends, interest, rents, and royalties, generally taxed at a flat 30% or a lower treaty rate.
Common income types that must appear on Form 1040-C:
- Wages and salaries earned in the US
- Self-employment income from US business activity
- Rental income from US property
- Interest and dividends from US financial institutions
- Capital gains from the sale of US assets
- Scholarship or fellowship income subject to tax
The key detail many filers miss is accrued income. If you earned income before your departure date but will not receive payment until after you leave, that income must still be reported on Form 1040-C.
Supporting documents such as Form W-2, Form 1099-INT, Form 1099-NEC, and Form 1099-MISC should be gathered before your IRS appointment.
How to fill out Form 1040-C: step-by-step instructions
The Form 1040-C instructions walk through each line of the form. Here is the process in practical terms:
- Gather your income documents for January 1 through your departure date. This includes W-2s, 1099s, K-1s, rental income statements, and any documentation of self-employment earnings. If final forms are not yet available, use your best estimate based on pay stubs or account statements.
- Determine your alien status. Are you a resident alien – green card holder or substantial presence test qualifier – or a nonresident alien? This determines which income you report and which tax rates apply.
- Complete the personal information section. Enter your name, taxpayer identification number, visa type, passport number, country of citizenship, US address, foreign address, and planned departure date.
- Report all US-source income by category. Use the income lines on the form to report wages, interest, dividends, business income, capital gains, rental income, and other income. Resident aliens include worldwide income.
- Calculate your estimated tax liability. Apply the appropriate tax rates to your reported income, taking into account any applicable tax treaties.
- Claim applicable deductions and credits. Resident aliens may claim the standard deduction or itemize, whichever is higher. Nonresident aliens generally must itemize, except students or business apprentices from India, who may claim the standard deduction under Article 21(2) of the US–India tax treaty. The foreign tax credit applies to both. Most nonresident aliens cannot claim a qualifying dependent for the child tax credit at all. Only nonresident aliens who are US nationals, residents of Canada, Mexico, or South Korea, or students or business apprentices from India can claim a qualifying dependent – and even then, the child must be a US citizen, US national, US resident, or a resident of Canada or Mexico.
- Compute the tax due and arrange payment. Subtract any estimated tax payments you have already made during the year and any withholding shown on your W-2s. Pay the remaining balance in certified funds at your IRS appointment, or post a bond if you cannot pay immediately.
- Bring the completed form and all supporting documents to your IRS appointment. The IRS will review your form, accept payment, and issue your sailing permit.
Based on a common TFX client scenario, the most frequent error on Form 1040-C is failing to include accrued but unpaid income earned before the departure date. Review your pay stubs and account statements carefully for income earned but not yet paid out.
The sailing permit: What it is and why you need it
The sailing permit – officially called a certificate of compliance – is the document the IRS issues after it reviews and accepts your Form 1040-C. It certifies that you have met your US tax obligations based on the information available at the time of filing.
The sailing permit is not a final determination of your tax liability. It is a clearance document that confirms you have reported your income, calculated the tax, and either paid what you owe or posted a bond.
The requirement to obtain a sailing permit before departure is a legal obligation under the Internal Revenue Code. Departing without one does not trigger an automatic penalty, but it does leave you out of compliance with US tax law.
The IRS may also cancel an existing permit for a future departure if it determines that collection of your tax liability could be jeopardized.
Form 1040-C for green card holders: special considerations
Green card holders who are departing the US permanently face additional tax obligations beyond the standard Form 1040-C filing. If you have held your green card for at least 8 of the last 15 tax years, the IRS considers you a “long-term resident.”
Surrendering your green card triggers the expatriation rules under IRC Section 877A.
Green card holders who have held their status for at least 8 of the last 15 tax years may be subject to the expatriation tax regime and must file Form 8854 in addition to Form 1040-C.
You are classified as a covered expatriate – and subject to the exit tax – if any one of these three conditions applies:
- Your net worth is $2,000,000 (2025) or more on the date you surrender your green card.
- Your average annual net income tax liability for the 5 tax years before expatriation exceeds $206,000 (tax year 2025) or $211,000 (tax year 2026) – use the threshold for the year you actually expatriate.
- You fail to certify on Form 8854 that you have complied with all federal tax obligations for the preceding 5 years.
The exit tax treats certain property as if it were sold on the day before your expatriation date. This creates a potential capital gains liability even if you did not actually sell anything.
Long-term green card holders should also review Form I-407, which is the USCIS form used to formally abandon lawful permanent resident status.
Net investment income and other taxes that may appear on Form 1040-C
Depending on your alien status and income profile, several additional taxes may apply and must be accounted for on Form 1040-C.
- Net investment income tax – The 3.8% NIIT applies to resident aliens only – not nonresident aliens – whose modified adjusted gross income exceeds $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately. These thresholds are not indexed for inflation. If you are a resident alien with significant investment income, this tax must be included in your Form 1040-C calculation.
- Self-employment tax – Resident aliens with self-employment income from a US trade or business owe the 15.3% combined Social Security and Medicare tax on net earnings above $400. Nonresident aliens are generally not subject to self-employment tax, unless a Social Security totalization agreement places them under the US system.
- Additional Medicare tax – An extra 0.9% tax applies to wages and self-employment income above $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately.
- Estimated tax payments already made – Any quarterly estimated tax payments you made during the year should be credited against your Form 1040-C liability. Bring proof of these payments to your IRS appointment.
The net investment income tax may apply to departing resident aliens with investment income above the applicable threshold and must be included in the Form 1040-C calculation.
Real-world examples of Form 1040-C usage
These three scenarios, based on common TFX client situations, illustrate how different aliens use Form 1040-C.
Example 1: L-1 visa holder returning home after a 3-year assignment
Raj, an Indian national on an L-1 intracompany transfer visa, worked in the US for 3 years and is returning to India in October. He earned $145,000 in wages from January through his departure date. Because he met the substantial presence test, Raj is treated as a resident alien for tax purposes.
Raj must file Form 1040-C reporting his worldwide income through October, pay the estimated tax due, and obtain a sailing permit. After December 31, he must still file a final Form 1040 for the full tax year, crediting the amount he already paid on Form 1040-C.
Example 2: Green card holder permanently relocating abroad
Maria, a Brazilian national, held her green card for 10 years. She is moving back to Brazil permanently and surrendering her green card. Her net worth is $2,800,000 (2025), which exceeds the $2,000,000 covered expatriate threshold.
Maria must file Form 1040-C before departure and also file Form 8854 with her final annual return. Because she is a covered expatriate, the exit tax applies.
Her unrealized gains on certain assets are treated as if sold the day before expatriation. If she has deferred tax payments, an eligible deferred compensation item, or an interest in a nongrantor trust, she will need to continue filing Form 8854 annually until that obligation is resolved.
Example 3: F-1 student with scholarship income who qualifies for Form 2063
Chen, a Chinese national on an F-1 student visa, received a $25,000 university scholarship during the year. The scholarship covered tuition and required fees, making it fully exempt from tax under IRC Section 117. Chen had no other US-source income.
Because Chen’s only US-source income is a scholarship covering tuition and required fees, and he holds an F-1 visa, he falls under the sailing permit exemption for students. He does not need to file Form 1040-C or Form 2063, and he does not need to visit an IRS office before departure. Chen should still keep documentation showing the scholarship was fully exempt under Internal Revenue Code section 117, in case a border officer asks for it.
Chen still receives a sailing permit – the certificate of compliance detached from Form 2063 – but skips the full income and tax computation required on Form 1040-C.
Chen’s case shows that some departing aliens need no sailing permit at all, not even the shorter Form 2063.
Common mistakes to avoid when filing Form 1040-C
Filing Form 1040-C involves a hard deadline and an in-person IRS appointment, which leaves little room for error. Here are the five mistakes that most often delay or derail a filing permit.
- Filing too close to the departure date. IRS Taxpayer Assistance Centers operate by appointment only, and availability varies. If you call the week before your flight, you may not get an appointment in time. Schedule your visit at least 3–4 weeks before departure.
- Omitting accrued but unpaid income. Income you earned before your departure date but will not receive until after you leave must still be reported on Form 1040-C. This includes final paychecks, bonuses tied to work already performed, and interest that has accrued but not yet been credited.
- Confusing Form 1040-C with the final annual return. Filing Form 1040-C does not satisfy your obligation to file a final Form 1040 or Form 1040-NR after the tax year ends. These are separate filings.
- Failing to account for state tax obligations separately. Form 1040-C is a federal form only. If you lived or worked in a state with an income tax, you have a separate state filing obligation that Form 1040-C does not cover.
- Not bringing required documents to the IRS appointment. The IRS needs to see your passport, visa or green card, prior-year returns, income statements, and proof of departure. Missing documents can result in a delayed or denied sailing permit.
One of the most costly mistakes departing aliens make is assuming that filing Form 1040-C satisfies their obligation to file a final annual Form 1040 or Form 1040-NR – it does not.
What happens after you file Form 1040-C: the final annual return
Form 1040-C covers your income only through the departure date. After the tax year ends on December 31, you must still file a final annual return.
- Resident aliens file Form 1040.
- Nonresident aliens file Form 1040-NR.
- Dual-status aliens file a dual-status return following the rules in IRS Publication 519.
Any tax paid with Form 1040-C is credited against the total tax liability shown on your final annual return, so overpayments may result in a refund.
The final annual return reconciles everything: your total income for the full year, all deductions and credits, and the total tax due. The amount you paid when filing Form 1040-C is treated as a prepayment.
If you overpaid, you can claim a refund on the annual return. If your actual liability is higher than what you paid on Form 1040-C, you will owe the difference.
Form 1040-C and state tax obligations: what departing aliens often overlook
Departing aliens who lived or worked in a state with an income tax must separately file a state return for the period of residency – Form 1040-C provides no state tax clearance.
Form 1040-C is a federal IRS form only. It does not address, satisfy, or replace any state income tax filing requirement.
If you lived in a state with an income tax – such as California, New York, or Massachusetts – you likely need to file a part-year resident state return. This return covers the period you were physically present in that state.
Some states have their own departure or final-year filing rules that differ from the federal requirements. States with no income tax – such as Texas, Florida, and Washington – do not require a separate state filing.
How TFX helps departing aliens file Form 1040-C correctly
TFX has helped departing aliens from over 190 countries navigate the Form 1040-C process, including green card holders subject to expatriation tax rules.
Here is how the process works:
- Initial consultation – We determine whether you need Form 1040-C or the simpler Form 2063, based on your income, visa status, and departure timeline.
- Form preparation – TFX prepares your completed Form 1040-C, including all supporting schedules, and calculates the estimated tax due. We also prepare Form 8854 for green card holders subject to the expatriation rules.
- IRS appointment coordination – We advise on scheduling your TAC appointment and ensure you have all required documents ready.
- Final annual return – After the tax year ends, TFX prepares your final Form 1040 or Form 1040-NR, credits the amount you already paid on Form 1040-C, and files the return on your behalf.
TFX specialists have helped departing aliens from over 190 countries navigate the Form 1040-C process, including green card holders subject to expatriation tax rules.
Frequently asked questions
No. Form 1040-C is a pre-departure tax clearance document – it covers income from January 1 through your departure date only. You must still file a final annual return – Form 1040 or Form 1040-NR – after December 31 to report your full-year income and reconcile the tax you paid on Form 1040-C.
A sailing permit, officially called a certificate of compliance, is issued by the IRS after it accepts your Form 1040-C and you pay any tax due.
You obtain it by scheduling an in-person appointment at an IRS Taxpayer Assistance Center and bringing your completed Form 1040-C along with all required supporting documents.
Generally, no. Form 1040-C applies to aliens who are departing permanently or for an extended period. Short-term travelers on a B-2 (pleasure) visa are exempt regardless of length of stay. Those on a B-1 or combined B-1/B-2 (business) visa, or present under Visa Waiver, are exempt if they do not stay in the US or its territories more than 90 days during the tax year.
However, if you are a resident alien leaving for an extended time and have US-source income, confirm your obligation with the IRS or a tax professional.
Form 1040-C cannot be filed electronically or by mail under normal circumstances. The IRS requires you to file it in person at a Taxpayer Assistance Center, where an IRS officer reviews your form and issues the sailing permit on the spot.
The appointment must be scheduled in advance by calling 844-545-5640.
Bring your valid passport, visa, or green card, the completed Form 1040-C, prior two years of tax returns, W-2s and 1099s for the current year, and proof of any estimated tax payments.
Also bring documentation verifying your departure date – such as an airline ticket. If you are claiming treaty benefits, bring the relevant treaty documentation.
No. Form 1040-C covers only the period through your departure date. You must file a final annual return after the tax year ends. The tax you paid on Form 1040-C is credited against your annual return liability – if you overpaid, you may receive a refund.
Form 1040-C is the full Form 1040-C departing alien income tax return, required of anyone with taxable income for the year, not just income from US sources.
Form 2063 is a shorter departure statement available only to aliens with no taxable income for the current and prior year, or to resident aliens whose departure will not hinder tax collection. If you had taxable income and don’t meet that second condition, you must use Form 1040-C.
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