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F1 Visa Students Stock Trading – Allowed? Invest – Buy, Sell and Taxes ?

In general students are passionate about financial markets, F1 students in US are not different…Some of the F1 students might have been investing in stocks in their home country, before moving to US for education…they may want to continue to invest in stocks to have an understanding of the US financial markets…the question is around “Is it legal for F1 students to invest in stocks ?” . In this article, we will cover various aspects about F1 student stock trading.

Can F1 students invest in stocks ?  Can they buy, sell stocks ?

Yes, international students on F1 visa can invest in stock market…they can buy and sell stocks…There is no specific law that prevents F1 visa students studying in Universities or colleges from doing stock trading. Investing in stock market as a passive investor is absolutely fine as long as it not done as a full time activity like a day trader.

They key thing to remember is that when you are on 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 main stream activity. Also, after your student status, you are very likely to apply for H1B visa and work on the same, the good news is that you can do stock trading on H1B visa as well.  As always, you need to maintain your proper visa status on H1B as well.

What do I need to have for doing Stock trading as F1 student ?

Typically, most of the stock brokerage firms require 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 30 % tax on the 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.

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 ?

   

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21 Comments

  1. hello,

    If I’m simply investing in stocks for the long term but not making any immediate capital gains, am i still subject to tax considerations that year? That is, should i declare the details of investment in the W-8BEN form for that year?

    Reply
    • Same Question, Plus,

      What if we have loss booked on capital invested.

      How will we get exact accurate info. on what has happened with our account. Does Robinhood provide something at end of year to file our taxes.

      Please elaborate.
      Thanks.

      Reply
    • Buying stock does not create a taxable event. As far as the IRS is concerned, you could have spent your money on a new boat, used that money to take a vacation or put it under your mattress. You don’t report your stock purchase to the IRS, and you don’t pay income taxes on your purchase transaction, but you still need to keep documentation of the transaction to help determine the cost basis of your stock for when you decide to sell sometime in the future.

      While you have to pay taxes on any dividends you receive, you don’t pay taxes on stock you own, regardless of how long you own it. You can buy stock at $2 per share and hold it for 50 years or more. The stock might appreciate to $200 per share or more, and you would still not owe any income taxes on it. You are not taxed on your stock until you sell it.

      You can check it on: https://finance.zacks.com/irs-taxes-buying-selling-stocks-5319.html

      Reply
  2. Hello,

    My name is Faisal Ansari. Q&A is super helpful, you have covered most of the part. However, i want to know that if F-1 visa holder who has not SSN and does not want to engage with broker and want to do trading by him/herself on some specifically trading website like ufx.com. How that’s work? How/where F-1 visa holder submit his/her paperwork?

    Reply
  3. Hi,

    Can anyone tell me if trading (say weekly) in Cryptocurrency is legal as an F1 student? Also, would it be legal as an H1B holder?

    Thanks Much!

    Reply
  4. There is a rule that F1 visa students cannot have more than 1 source of income. If I anyway have an on campus job / internship and also get dividends, will that count as 2 sources of income?

    Reply
    • Myvoor Checkove,
      AFAIK the only thing F-1 students are exempted from is Social Security and Medicare as they are considered non-resident aliens. Other than that, Indian students pay all the taxes.

      Reply
    • Hi Myvoor Checkove,

      Under US-India tax treaty article 21(2) International students and business apprentice from India are eligible for Standard Deduction (as oppose to Itemized Deduction for other countries). Standard Deduction along with exemption for ‘Self’ generally reduces you taxable income. From what we have seen over many years that almost all students usually have income close to that amount unless you are on CPT or OPT working full-time.

      Reply
  5. Awesome post, because this applies to ALL students foreign or not. You should ask the IRS and the immigration office on campus.
    Please read and comment. Leave a post with your experiences at the University

    Reply

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