In general, students are passionate about financial markets. International students on F1 Visa studying in the US are not different…Some of the F1 students might have been investing in stocks in their home country before moving to the US for education…they may want to continue to invest in stocks to have an understanding of the US financial markets…the question is, “Is it legal for F1 students to invest in stocks ?”. In this article, we will cover various aspects of F1 student stock trading.
Can F1 students invest in stocks? Can they buy, sell stocks?
Yes, international students studying in the US on an F1 visa can invest in the stock market…they can buy and sell stocks…No specific law prevents F1 visa students studying in Universities or colleges from doing stock trading. Investing in the stock market as a passive investor is absolutely fine as long as it is not done as a full-time activity like a day trader.
The key thing to remember is that when you are on an F1 visa, you are a full-time student enrolled in a university…you need to maintain your proper F1 student status by enrolling in required course credits and be in good academic standing. Stock trading is a passive income activity and should not be your mainstream activity.
Also, after your student status, you will likely apply for an H1B visa and work on the same. The good news is that you can do stock trading on an H1B visa as well. As always, you need to maintain your proper visa status on H1B as well.
What do I need to do for Stock trading as F1 student?
Most stock brokerage firms typically require a Social Security Number (SSN) for stock trading. The reason is that for your capital gains, it is required by IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process. If you do not have SSN, you need to apply for it once you become eligible for it. One of the common ways you get eligible to apply for SSN is when you get on-campus job or CPT/ OPT authroization.
To apply for SSN, you can use that on campus offer letter or CPT/OPT authorization document and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration(SSA) Office, check full details at SSA Website . SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to IRS/Government.
I do NOT have SSN, Can I still do stock trading as F1 student?
While many stock brokerage firms require SSN, you are not out of luck, if you do not have one…you will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) and can use the same when applying for stock brokerage account. While some of the firms accept ITIN number, it totally depends on the stock brokering firm and you need to check with the one that you are interested in.
What do I have to do from Tax side, if I do stock trading in US as F1 students?
In general, you need to file taxes as F1 student. If you do stock trading, they need to get added to your tax filings as well. You need to declare the investment and gains of your stock related investments for tax purpose and pay required tax on the gains.
There are many online tools around the same or you can check with your school or public libraries where there are free or voluntary tax services help. I suggest you check with a tax consultant, if you are not fully sure on how to file or pay them.
How much Tax has to paid on my dividends typically as F1 student ?
Currently, foreign nationals are subject to a 30 % tax on dividends or any of the stock-related capital gains. It will be same for F1 students or H1B holders. This is something that needs to be kept in mind when investing. Also, you will need to submit a form W-8BEN form with your stock broker for IRS tax purposes.
Who are some of the popular stock brokers that offer Trading accounts for F1 Student?
TradeKing is one of the most popular stock brokerage services. You may also look at Scottrade and other companies. Some companies may have some limits for trading or may not accept F1 students, you need to check with the firm.
Did I miss anything? Did you open stock brokerage account as F1 student ? What are your experiences ?