When you work in the US on H1B Visa, you can make a decent amount of money to pay for your living expenses and also put in a good chunk of it towards savings. As many think about savings and investing on H1B Visa, there comes a question, if there are any restrictions related to being on H1B Visa in the US. Questions like “Can I do stock trading in the US”, “How does Day trading work with H1B”, or “How do taxes work with Stock Trading on H1B”, many such questions. In this article, we will explore all those details related to stock trading on H1B Visa.
What is Stock Trading in the US ? How does it work ?
Stock Trading in the US is nothing but buying and selling stocks related to a company that is listed publicly in the US Stock exchanges. The general concept of stock trading is similar to other countries. The main difference is the list of stock exchanges that are used for stock trading. There are many stock exchanges in the US, below is the list where the public can buy and sell stocks.
- Two main Stock Exchanges
- Other smaller Stock Exchanges
- Chicago Stock Exchange (CHX)
- Boston Stock Exchange (BSE)
- National Stock Exchange (NSX)
- Philadelphia Stock Exchange (PHLX)
- Miami Stock Exchange (MS4X)
In general, individuals (retail buyers) need to create an account with stock brokers like Interactive Brokers, ETrade, Robinhood, Ameritrade, etc. where they can buy and sell the stock of any publicly-traded company.
Now that we understand the basics, let’s get into the context of H1B Visa holders and doing stock trading.
Can H1B holder invest in stocks ? Buy stocks ?
Yes, H1B visa holders can invest in the stock market and do stock trading in the US. They can buy and sell stocks like any other retail investor. There are no rules that says H1B holder cannot do stock trading in the US. H1B holders can create an account from one of the online stock brokers like Robinhood, Ameritrade, etc and start buying and selling stocks. It is perfectly legal to do general delivery-based stock trading.
Requirements for H1B holder to buy stocks ?
The requirements for H1B holders to do stock trading are similar to US citizens, with some additions. You cannot trade on behalf of someone, it should be for you and from your own account. Below is the common list of requirements for H1B holders to do stock trading.
- You need Social Security Number (SSN).
- Copy of Passport
- Copy of H1B Visa Stamp in Passport ( if you arrived in US on H1B)
- Copy of H1B Approval notice ( Optional)
- Copy of I-94 Arrival / Departure Card
- (For some brokers) Employment information like Employer Name, address, phone.
- US Residential address proof like a utility bill or rental agreement
- Some brokers have restrictions on the age like for Robinhood, you need to 18 years or older
Most of the time, when you try to sign-up online, you will be given the list of documents they will need from you. You should speak to these stock brokerage agencies if any clarification needed.
Day trading vs Delivery based trades on H1B visa ?
In general, there are two main options to do stock trading. One is to delivery-based trading, where you buy and hold the stock for the long term and not sell on the same day. Unlike, the second option is to do day trading, where you buy and sell the stock on the same day. In general, most of the H1B holders do delivery-based trades(long-term investing). Day trading is usually done by full-time stock traders as it requires a lot of time and effort.
Usually, when you are on H1B, to main proper legal status, you are supposed to work full time for the employer, and the majority of your time should go towards that, where you have legal approval to work. When you get into day trading, much of your time may go into that and that is a grey area and subject to scrutiny. While some do day trading on and off, but it should not be done as a full-time job. It can raise questions on the maintenance of H1B visa status.
In fact, there is no immigration rule that clearly tells that you can do Delivery based Stock Trading or Day trading. The immigration rules for H1B tell that you need to work full time for your H1B sponsor and maintain status. You may do passive investments like Stock Trading. But, the passive investments or the time you spend for that cannot be equal to a full-time role like someone working as a Day Trader at a stock brokerage company.
Paying taxes for Stocks trading gains on H1B visa
You should pay all required taxes in US for all your Stock earnings. No exceptions as it is a source of income for you you are required to pay Taxes to IRS on your income. As an H1B holder, you are subject to standard taxation on capital gains on profits from selling stocks. This can be a tricky area, if you are doing a lot of trades and timing varies. It is a good idea to go to a tax consultant to get help with filing taxes.
If you are not sure, it is always best to use tax consultants for filing taxes for stocks, as it can get complicated. Because, if you lose money, it is tax deductible and you can get some advantages. You may miss some of these nuances, if you file on your own.
USCIS Rules on H1B holders doing stock trading
There are no USCIS official rules regarding H1B holders that tells they can do stock trading or not get involved in stock trading. USCIS only publishes information related to maintenance of visa status and its requirements. They say that you should not violate your legal H1B status, when you do these investing activities.
What it means is that, if you are a full-time student on F1 visa, you need to be enrolled full time and maintain legal status and not work off camps, etc. Similarly, if you are on H1B Visa, you are supposed to work full-time for the companies that sponsor your H1B Visa, you cannot do stock trading on your own as a full-time job…If you are in doubt, you should always check with your attorney or tax consultant.
Can I do Forex Trading on H1B Visa ?
Similar to other types of stock trading, there are no special rules laid out for Forex Trading. The same logic applies as that of delivery based trading. Unless the stock brokerage restricts you, there is no restriction as such. It cannot be your full time job. If it is done as an investment like delivery based stock trading, you are free to do this as well.
What has been your experience ? Share your experiences in comments
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