In general, students are passionate about financial markets. International students on F1 Visa studying in the US are no different. Some F1 students might have invested in stocks in their home country before moving to the US for higher education. They may want to continue investing in stocks to understand the US financial markets and also try to build wealth.
The big question is, “Can F1 students invest in stocks?”, “Is it legal for F1 students to invest in stocks ?” and many such similar questions. This article will cover various aspects of F1 student stock trading in the US.
Can F1 students invest in stocks? Can they buy and 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 US stock market as a passive investor is fine as long as it is not done as a full-time activity like a day trader.
The main thing to remember is that when you are on an F1 visa, you are a full-time student enrolled in a university. You, as a student, need to maintain your proper F1 student status by enrolling in required course credits and being in good academic standing. Stock trading is a passive income activity and should not be your mainstream activity.
Also, after your F1 student status, you will likely apply for an H1B visa and work on the same. The good news is that you can continue to do stock trading on an H1B visa as well. As always, you must maintain your visa status on H1B by working full-time at the H1B sponsoring company.
How do I get started to do Stock trading in the US as an F1 student?
Most US stock brokerage firms typically require a Social Security Number (SSN) for stock trading. The main reason for the SSN requirement is for tax purposes. They use it to track your capital gains and report it to the IRS. If you work on campus, then you would already get an SSN as part of the job application process.
If you do not have an SSN, you must apply for it once you become eligible. One of the common ways you get eligible to apply for SSN is when you get an on-campus job or get CPT/ OPT authorization.
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, and I-94 and apply for SSN at the Social Security Administration(SSA) Office, check complete details at F1 Students Apply SSN – SSN Official Website. SSN is typically used to report job wages by employer for tax purposes or check benefits eligibility to IRS/Government.
Can F1 Students do Day Trading in the US?
No, you cannot do day trading in the US as an F1 Student. The simple reason is that being a day trader means you are doing it full-time by buying and selling stocks on the same day. As an F1 Student, your main purpose is to study in the US as a full-time student.
When you do day trading, you will violate the F1 Student Status as you will be doing day trading full time. If you violate your status, you can end up in a lot of trouble. Do not try to bend the rules, thinking no one would be watching if I sell and buy a few stocks daily. You will get in trouble if you break the rules. So, stay away from day trading, if you are an F1 Student.
Can F1 Students do stock trading in the US without SSN? How?
While many stock brokerage firms require an SSN, it is not mandatory to have an SSN to do stock trading in the US. The US Internal Revenue Service (IRS) allows foreigners without an SSN to use an Individual Taxpayer Identification Number (ITIN) for tax-related purposes. This opens the door for F1 Students without SSNs to do stock trading in the US.
You will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) number with the IRS and can use the same when applying for a stock brokerage account. While some of the stock brokering companies accept ITIN numbers, some do not. It totally depends on the stock brokering firm and you need to check with the one that you are interested in.
List of Stock Brokers who Accept ITIN Number to Opening Account
If you are an F1 student and do not have an SSN, you must apply for ITIN. Once you have the ITIN, you can reach out to any of the below stock brokers to open an account with them to do stock trading in the US.
Below is not a comprehensive list of stock brokerage companies that accept ITIN numbers, but it is a good list that is verified based on the feedback from our user community.
- Fidelity
- TD Ameritrade
- Charles Schwab
- Oanda
- eToro
- Interactive Brokers
When you call any of the above broker’s customer service to open an account, sometimes, you may encounter hurdles. In such cases, you should ask to speak to the supervisor or someone who heads the unit, as not all of them know this option with ITIN.
What do F1 Students need to do from Taxes side, if they do stock trading in the US?
In general, you need to file taxes as an F1 student. If you do stock trading in the US, the gains or profits you make from the stock trading need to be added to your tax filings as well. You need to declare the investment and gains of your stock-related investments for tax purposes and pay the required tax on the gains.
There are many online tools around the same time, or you can check with your school or public libraries where there are free or voluntary tax services. It is always better to check with a tax consultant if you are not fully sure how to file or pay them.
How much Tax has to be paid on the gains as an F1 Student?
F1 Students in the US are categorized as non-resident aliens for tax purposes for the first 5 years. If you are a non-resident, there is a flat tax of 30% on the gains made in the stock purchases. Read Tax Rule for non-resident Students on IRS.gov
When you are investing, this is something that needs to be kept in mind as the tax implications are higher as an F1 Student. Also, you must submit a W-8BEN form with your stock broker for IRS tax purposes.
List of Popular US Stock Brokers for F1 Students?
If you have an SSN as a student, you are not limited by the stockbroker. You have literally access to every single stock broker in the US. Having said that, if you do not have SSN, then you are limited by the companies that offer to open an account with ITIN.
The below list of companies is a generic list and not specific to F1 Students
- Robinhood (if you have an SSN)
- Fidelity
- TD Ameritrade
- Charles Schwab
- E-Trade
- Interactive Brokers
- Ally Invest
Did I miss anything? Did you open a stock brokerage account as an F1 student? What are your experiences? Share your thoughts in comments section below.
Can you do Options trading and is there any limit on number of trades we make in a day or a week?
GG,
There are no clear rules on the options trading as such specific to F1 Students. All the general rules apply. As long as it does not fall under day trading category, you maybe able to do it.
The Capital gains tax is 30%. But what about state tax? Do we also pay capital gains state tax on top of 30%?
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?
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.
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
Harsha,
Thanks for sharing insights !
Is there any limit on how much you can earn through share market while on F1-OPT ? How does the taxation work in that case ?
Piyrate,
There is no limit as such…
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?
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!
Any idea on day-trading? Selling and buying stock in same day? Is that legal as well on OPT F-1 Status?
It is legal. However, I would suggest that you read about Pattern Day Trader Rule before you go all in on day-trading.
What are the good platforms to trade a d invest in stocks???
How does taxing work if in aggregate I end up losing money?
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?
you were so helpful. thank you so much. I live in Utah and now I am gonna start investing
Hi,
Is there a US India Tax treaty under which F1 students are exempt from the 30% tax?
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.
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.
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
What are the steps to start stock exchange ? As in f1 status
I am not sure, what you mean ? Do you want to setup stock exchange like NYSE ? Really ?