Christine Hradsky No Comments
Departure Permits

There are two form options for resident and non-resident aliens to consider in regards to departure permits.

By Bethany Bouw

There are special considerations for resident aliens and nonresident aliens when leaving the United States (and US Possessions). When aliens depart the US, they need to have a certificate of compliance to document the following things:

  • Report the income (actual and expected) for the tax year and pay the taxes expected as required,
  • That the resident alien’s open taxable period’s US income tax obligations are satisfied, or
  • That there is no taxable income from US sources for the nonresident alien.

Which Form to Pick?

There are two forms to pick between to file for the certificate of compliance (Departure Permit/Sailing Permit): Form 1040-C and Form 2063. Resident aliens and non-resident aliens can both use either form as appropriate. Form 2063 is the shorter and easier to complete form in comparison to Form 1040-C, but it also has different requirements.

Form 2063

You are eligible to file Form 2063 if you have done the following:

  • All your required income tax returns are filed,
  • All your due taxes are paid,
  • You have either:
    • $0 taxable income for the departure year (and the prior year if you have not reached the end of the filing period for the prior year), OR
    • The Area Director has concluded that your departing will not hamper tax compliance and collection as a resident alien with taxable income in either the departure year or prior year.

Form 1040-C

If you are not eligible to file Form 2063, you should complete Form 1040-C. This form documents your actual income, the expected income for the year, and calculates a tax to be paid prior to departure. Form 1040-C has additional disclosures related to your visa, withholding documents, the value of US property, and tax filing arrangements. If a non-resident alien with non-effectively connected income with a US trade or business, the filing taxes at a 30% rate on the FDAP (fixed, determinable, annual, and periodic) income. For income effectively connected with a US trade or business, the tax is determined using the tax rate schedules for the year in question.

Exceptions

There are those who are potentially exempt from obtaining a departure permit prior to leaving. They include, but are not limited to*:

  • Representatives of a foreign government holding a diplomatic passport and people connected to the representative.
  • International organization or foreign government employees exempt from US taxes and household members
  • Students, exchange visitors, or industrial trainees on one of the following visas: F-1, F-2, H-3, H-4, J-1, J-2, or Q
    • Spouses and children may also qualify
    • There are specific rules about US source income for this exception group
  • Students on one of the following visas: M-1 or M-2
    • Spouses and children may also qualify
    • There are specific rules about US source income for this exception group
  • Those on a pleasure trip with a B-2 visa
  • B-1 or B-1/B-2 business trip participants who don’t stay in the US or US possessions more than 90 days in the tax year
  • Residents of Canada or Mexico who frequently commute to the US for work and are subject to income tax withholding

*This is not an exhaustive list. For specific questions, please contact your foreign tax expert.

When?

Take your forms and any other required paperwork and records to the local IRS office at least TWO WEEKS before you leave the US. The issuance date on the certificate must be within 30 days of departure. If you are a married couple who are both aliens and are both departing, both individuals must go to the local IRS office to have their certificates issued.

Ryan & Wetmore has assisted clients with their resident alien and nonresident alien taxes over the years. We would be happy to assist you if you have concerns about your tax needs pertaining to departing the US.


The International Tax Team at Ryan & Wetmore is well-versed in foreign informational filings. For questions or concerns regarding your international accounts and assets, click here to email our foreign tax team.  Please be aware that tax issues are complicated and may vary based on the details of your situation. For this reason, an initial phone call is generally required to obtain the facts and address the questions.

Bethany Bouw CPA, is a manager at Ryan & Wetmore and has been with the firm for over eight years. She has experience with offshore voluntary compliance and assisting taxpayers with foreign asset and entity reporting requirements.

Traci Getz CPA, is a partner with Ryan & Wetmore, P.C. Traci has over fifteen years of experience providing accounting, tax, and consulting services to small and medium-sized business owners. She works with clients to understand their accounting and tax issues while specializing in international tax, healthcare, and construction.


Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

© Copyright 2018. All rights reserved.
Brought to you by: Ryan + Wetmore