Introduction
If you're a foreign national leaving the United States, you may need Form 1040-C, the U.S. Departing Alien Income Tax Return, before you go. It's the filing behind the certificate of compliance, better known as the "sailing permit."
Here's the catch. Form 1040-C is a pre-departure clearance filing. It does not replace your final Form 1040, Form 1040-NR, or dual-status return. Many people file it, board the plane, and forget the annual return still waits.
If you're heading to Australia, there's a second layer. Australian tax residency and ATO obligations run separately from anything the IRS decides. This guide covers who files, what the form reports, how the appointment works, and what comes next.
Key Takeaways
- Eligibility turns on tax status, income, departure facts, exemptions, and Form 2063.
- Report income received and reasonably expected, not just what appears on W-2s.
- Plan ahead: IRS appointment, records, and payment or approved security.
- A final U.S. return, state filing, and Australian filings may still follow.
Who Must File Form 1040-C, and Who May Not Need It?
Resident and nonresident aliens generally need clearance before leaving unless an exemption applies. Your tax status decides this, not your visa label. Green card or substantial presence tests determine residency. Dual-status means you were a resident for part of the year and a nonresident for the rest.
A signed Form 1040-C or Form 2063 certificate works as the sailing permit, according to the IRS.
Exemptions from the requirement
The current Form 1040-C instructions list the main exempt groups:
- Diplomats and certain international organisation or foreign-government employees, with conditions on other U.S. income
- F-1/F-2, J-1/J-2, H-3/H-4, Q and M-1/M-2 holders whose only U.S. income fits narrow categories, such as study allowances or authorised employment
- B-2 pleasure visitors
- B-1 business visitors staying no more than 90 days in the tax year
- Transit passengers, border-card entrants, Canada/Mexico commuters, and military trainees on official orders
A visa category alone is not enough. Your income and travel facts must fit. Even the visitor, transit, border and military group loses its exemption if the IRS area director believes you have taxable income and your departure would hinder collection.
Form 2063 versus Form 1040-C
Form 2063 (revised September 2024) involves no tax computation. You may use it if:
- You have no taxable income through departure, and none in the preceding year if that filing period is still open
- You're a resident alien with taxable income, but your departure won't hinder collection
Outstanding required returns and tax must be dealt with first. Form 2063 isn't a universal substitute.
A quick decision path
- Confirm when you're leaving.
- Determine whether you're a resident, nonresident or dual-status.
- Review current and prior-year income.
- Test for an exemption.
- If none applies, check Form 2063 eligibility. If that fails, file Form 1040-C.
What Does Form 1040-C Cover? Income, Status, and Estimated Tax
The form's purpose is to report income received or reasonably expected for the entire year. The ordinary rule counts income received or expected through your departure date.
If you intend to file a return and collection isn't jeopardised, the IRS may allow filing without payment, and you then report the whole departure year's income, per the instructions. Confirm which rule applies to you at the appointment.
Residents, nonresidents and dual-status taxpayers
- Residents generally report worldwide income, including wages, interest, dividends and rents.
- Nonresidents report income effectively connected with a U.S. business (ECI) at graduated rates, plus U.S.-source non-ECI (interest, dividends, rents, royalties) at 30% or a lower treaty rate.
- Dual-status filers must coordinate with the final annual return. Their standard deduction is zero unless they elect resident treatment.
Income to review before you leave
Check each of these:
- Wages and bonuses, including any still pending
- Self-employment or business income
- Rental receipts, interest and dividends
- Capital gains, including gains on personal property sales
- Scholarships, fellowships and partnership or S corporation amounts
The test is income "received or reasonably expected to be received." Forms W-2 and 1099 often arrive after you've left, so relying on them alone can leave out final pay, a pending bonus or rent still due.
Deductions, credits, withholding and treaties
Residents use Schedule A (1040). Nonresidents with ECI use Schedule A (1040-NR). Nonresidents without ECI get no deductions. Don't assume the same benefits apply to both.
Withholding and estimated payments reduce your balance. Treaty-exempt income must be reported with the exemption basis and treaty article attached.
Form 1040-C is an estimate, reconciled later on your annual return. Keep pay records, withholding statements and treaty documents.
How to Prepare and File Form 1040-C Before Departure
Visit a Taxpayer Assistance Center at least 2 weeks, but no more than 30 days, before departure. Call 844-545-5640 to book. Some offices have no slots in that window, so start early and use the IRS office locator to find another office.
Filing is in person only. IRS instructions do not allow e-file or mail. If you can't attend, a representative with Form 2848 (power of attorney) may file on your behalf.
Information on the form
Expect to provide:
- Taxpayer identification number and citizenship
- Visa or immigration details
- U.S. and foreign addresses
- Expected departure details and residency classification
- Income and tax calculations
Documents to gather
The IRS checklist includes:
- Passport and alien registration card or visa
- U.S. returns for the previous 2 years (or your whole U.S. stay, if shorter), plus payment receipts
- Wage and withholding statements through departure, or self-employment income and expense records
- Deduction, business-expense and dependant records
- Proof of estimated payments
- Scholarship, fellowship and treaty documents
- Proof of departure, such as an airline ticket
- Proof of taxpayer ID, such as an SSN card or CP 565
- Spouse documents for community-property states
Estimating and paying the tax
Subtract withholding and estimated payments from your computed liability. Generally you pay the Form 1040-C tax and any outstanding prior-year tax. Accepted payment methods are a cashier's cheque, certified bank or postal money order, or cash. Don't assume personal cheques are accepted.
The IRS may accept a bond covering tax plus interest instead. That option is discretionary and depends on your circumstances.
The appointment and certificate
You submit the form and records. The IRS reviews them and takes payment or approved security. If accepted, you receive the certificate of compliance.
The permit is tax clearance only. It isn't immigration authorisation and doesn't fix your full-year liability. Keep it and copies of everything you submitted.
What Happens After Filing Form 1040-C?
Form 1040-C is not an annual return. You still file after the tax year ends:
- Form 1040 if you're a resident at year-end
- Form 1040-NR if you're a nonresident at year-end
- Dual-status return, marked "Dual Status Return," if your status changed
Tax paid with Form 1040-C is credited on that return. Overpayments aren't refunded at clearance. You claim them on the annual return, where you may also owe more if the final figure exceeds the estimate. VJM Global supports both Form 1040 and Form 1040-NR preparation.
Green card holders and expatriation filings
Physically leaving doesn't end green card tax residency. It continues until status is taken away or abandonment is formally determined.
A long-term resident (LPR in at least 8 of the last 15 tax years) who terminates status files Form 8854. Missing or inaccurate filings can bring a $10,000 yearly penalty.
The 2026 covered-expatriate tests include average annual net income tax above $211,000 over five years, net worth of $2 million or more, or failure to certify five years of federal tax compliance, per IRS guidance.
Voluntary abandonment is recorded on Form I-407, and USCIS gives the IRS your name and filing date.
State tax obligations
Form 1040-C is federal only. California, for example, taxes part-year residents on worldwide income for the resident period and on California-source income afterwards. File Form 540NR where a filing obligation exists, and check your own state's rules.
Australia-specific considerations
Form 1040-C doesn't determine Australian residency or satisfy ATO obligations. The ATO's residency tests cover:
- Residence
- Domicile
- The 183-day test
- The Commonwealth superannuation test
Permanent relocation can make you a resident without six months' presence.
Residents generally declare Australian and overseas income. Temporary residents may be exempt on most foreign income. A foreign income tax offset can relieve double tax. The offset is limited above A$1,000, with no refund or carry-forward. Claim it in the Australian income year that contains the income (1 July to 30 June). The Australia–U.S. treaty can apply as well. Review arrival-year income separately from your U.S. exit.
Common Mistakes to Avoid, and When Professional Help Makes Sense
Departing-alien filings leave little room for error. These mistakes often delay departure or create follow-up tax problems:
- Assuming a visa exempts you
- Applying at the last minute
- Treating Form 1040-C as your final return
- Using the wrong reporting period or omitting expected income
- Assuming Form 2063 cures unfiled returns or unpaid tax
- Skipping withholding and payment records
- Giving false or incomplete information, which can bring penalties
Pre-departure checklist
Work through these steps before you leave:
- Confirm your tax status.
- Decide between exemption, Form 2063 and Form 1040-C.
- Gather income, withholding and payment records.
- Book the TAC appointment inside the allowed window.
- Calculate the estimated liability.
- Prepare payment in an accepted form.
- Keep copies of everything you file.
- Calendar the final U.S. and Australian filings.
How VJM Global can support cross-border compliance
Complex income, prior unfiled returns or a tight departure timeline are good reasons to get professional help.
VJM Global is a firm of Chartered Accountants with U.S.-compliant professionals, serving Australian businesses, foreign nationals, NRIs and OCIs. Its tax, audit, accounting and international taxation teams can help assess your filing path, organise documents, prepare Form 1040-C and plan later annual and cross-border filings. The IRS makes the final filing and clearance decisions.
Frequently Asked Questions
Is Form 1040-C the same as my annual tax return?
No. It's a pre-departure clearance filing. You may still need a final Form 1040, Form 1040-NR or dual-status return after the year ends.
Who has to file Form 1040-C before leaving the United States?
Resident and nonresident aliens generally must, unless exempt. Review the exemption categories and Form 2063 eligibility in the current IRS instructions first.
Can I file Form 2063 instead of Form 1040-C?
Only in specific cases: no taxable income through departure, or a resident alien whose departure won't hinder collection. It isn't a general replacement.
When should I file Form 1040-C, and can I file it online or by mail?
Visit a Taxpayer Assistance Center 2 weeks to 30 days before departure. The IRS process is in person, with no e-file or mail route specified.
What documents do I need to bring for Form 1040-C?
Bring your passport, visa or green card, tax ID proof, two years of returns, income and withholding records, payment proof and your airline ticket.
Do green card holders need additional forms when leaving the United States?
Possibly. Permanent departure may involve Form 8854, long-term-resident rules, expatriation tax and Form I-407, depending on your facts.
