8.4- Alien Tax Clearance

If you're a resident or a nonresident alien departing the United States, you usually have to show that you have complied with the U.S. income tax laws before you can depart. You do this by obtaining from the IRS a tax clearance document, commonly called a departure permit or sailing permit.

Not Required to Obtain Alien Tax Clearance

The following six categories of people aren't required to obtain a departure or sailing permit:

• Category 1 - A representative of a foreign government entering with a diplomatic passport, members of their household and servants accompanying them.

• Category 2 - Employees of international organizations, foreign governments (unless exempt under category 1) and members of their households.

*Note: Aliens in category (1) or (2) who filed a waiver under §247(b) of the Immigration and Nationality Act, must get a sailing or departure permit even if their income is exempt from U.S. tax due to a tax treaty, consular or international agreement.

• Category 3 - Alien students, industrial trainees and exchange visitors, including their spouses and children who enter on an F-1, F-2, H-3, H-4, J-1, J-2, or Q visa and who receive no income from U.S. sources while in the United States under those visas other than the exceptions described in Publication 519, U.S. Tax Guide for Aliens.

• Category 4 - Alien students, their spouses and children who enter on an M-1 or M-2 visa and who receive no income from U.S. sources while in the United States under those visas other than the exceptions described in Publication 519.

• Category 5 - Certain other aliens temporarily in the United States who receive no taxable income unless the IRS believes they had taxable income during the year and their leaving the United States would hinder the collection of tax (e.g., (1) Alien military trainees in the United States sponsored under DOD orders; (2) Alien visitors for pleasure on a B-2 visa or business visitors on a B-1 or B-2 visa who don't stay in the United States or U.S. possession more than 90 days; (3) Aliens in transit through the United States or U.S. possession on a C-1 Visa; and (4) Aliens entering the United States or U.S. possession on a border-crossing ID card for pleasure, transit or business for no more than 90 days).

• Category 6 - Canadian/Mexican alien residents who frequently commute to and from the United States for work and whose wages are subject to U.S. withholding tax).

For additional information about these excluded categories, refer to Publication 519, U.S. Tax Guide for Aliens and Departing Alien Clearance.

If you don't fall into one of the above categories, you must obtain a departure or sailing permit, which must be presented at the point of departure. Obtain a permit by filing the applicable Form 2063, U.S. Departing Alien Income Tax Statement or Form 1040-C, U.S. Departing Alien Income Tax Return with your local IRS office (by appointment only) before you leave the United States.

Form 2063

This short form asks for certain information but doesn't include a tax computation. The following departing aliens can get their departure or sailing permits by filing Form 2063:

• Resident or nonresident aliens who have had no taxable income for the tax year and preceding year up to and including the date of departure, if the period for filing the income tax return for that year hasn't passed.

• Resident aliens who received taxable income during the tax year or preceding year and whose departure won't hinder the collection of tax as determined by the Area Director.

However, if the IRS has information indicating that the alien is leaving to avoid paying their income tax, they must file a Form 1040-C.

Aliens in either of these categories who haven't filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a departure or sailing permit on Form 2063.

Form 1040-C

If you must get a departure or sailing permit and you don't qualify to file Form 2063, you must file Form 1040-C.

Ordinarily, you must report on Form 1040-C and pay the tax on all income received or reasonably expected to be received during the tax year up to and including the date of departure. When you pay any tax shown as due on the Form 1040-C, file all returns and pay all tax due for previous years, you'll receive a departure or sailing permit. However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years.

Form 1040-C is not an annual U.S. income tax return. You must file a final income tax return.

The tax paid with Form 1040-C should be taken as a credit against the total tax liability on your income tax return after your tax year ends. If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. However, the IRS cannot provide a refund at the time of departure. If you are due a refund, you must file either Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors, at the end of the tax year to claim a refund.

When and How to Apply for a Departure or Sailing Permit

You must obtain your departure or sailing permit before you leave the United States. You should apply for the departure or sailing permit no earlier than 30 days before you plan to leave but at least two weeks in advance of your departure. To get your departure permit, make an appointment at your nearest Taxpayer Assistance Center. If you're married to an alien who is leaving the country with you, both of you must go to the IRS office.

You must bring with you all the following records and information for the current year that apply to you:

1. A valid passport and alien registration card or visa.

2. Copies of your U.S. income tax returns filed for the past two years. If you were in the United States for less than two years, bring the income tax returns you filed for that period.

3. Receipts for income taxes paid on these returns.

4. Substantiation to prove your deductions, business expenses, and dependents claimed on your returns.

5. A statement from each employer showing the wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave.

6. Proof of any estimated tax payments made for the past year and this year.

7. Documents showing any gain or loss from the sale of personal and/or real property, including capital assets and merchandise.

8. Documents concerning scholarships or fellowship grants received.

9. Documents indicating you qualify for any special tax treaty benefits claimed.

10. Document verifying your date of departure from the United States, such as an airline ticket.

11. Document verifying your U.S. taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN).

Note: If you're married and reside in a community property state, also bring the above-listed documents for your spouse whether or not your spouse requires a permit.

If you have these documents and pay any tax due, you should receive your departure or sailing permit immediately. For additional rules and information, refer to Publication 519, U.S. Tax Guide for Aliens.