An international student on an F1 visa is allowed to invest in the stock market. Thus, F1 students can invest in stocks and day-trade. There is no specific law against this, and it’s considered passive income. However, you need to be careful as the immigration department could perceive it differently based on your tax filings. In other words, immigrants could think that you were self-employed and worked without permission. Trading stocks cannot appear to be a business or a job.
There is no citizenship requirement for owning stocks of US companies. While U.S. stock investment securities are regulated by U.S. law, there are no specific provisions that forbid individuals who are not citizens of the U.S. from participating in the U.S. stock market. However, even if an international student can legally trade U.S. stocks and bonds, it may still be required (in addition to being advisable) for them to consult with an investment firm and use the services of a professional. In this post, we will look at how to invest in the US stock market as an international student.
What is an F1 student visa?
The F-1 student visa is a non-immigrant visa that allows international students to enter the US and study at institutions certified by the Student and Exchange Visitor Program (SEVP). It is the most popular type of student visa for students seeking to study at a US university or college, and you can only apply for your F-1 visa after an accredited US institution accepts your application.
What are the requirements for an F1 student visa?
There are some F-1 visa rules & regulations to keep in mind if you plan to apply for an F-1 student visa. You must meet these requirements for your application to be accepted:
- Institution certification—The College or the university where you plan to study needs to be approved by SEVP Immigration & Customs Enforcement.
- Full-time enrolment—you must be enrolled as a full-time student at the institution while your academic term is in session.
- English language proficiency—You must meet the required English language proficiency score of the institution you are attending or be enrolled in courses that will help you improve your English proficiency.
- Sufficient funding—You must prove that you have sufficient funds available to finance your studies and living expenses while in the US.
- Valid passport—Your passport should be valid for US travel for at least six months after your program completion date.
- Home country residency—You are required to have a residence in your home country to return to following the completion of your degree.
Can F-1 visa holders invest in US stock markets?
Yes, anybody can invest in the US stock market; however, it’s necessary to provide a tax ID number or social security number when opening up a stock market account. This is for the purpose of paying taxes. The question that’s not being asked is whether or not by investing in the stock market a person could acquire immigration status. If an investment is passive, then no, a person could not acquire status.
On the other hand, if a person was in the stock market on behalf of others, and this was his career then yes a person could potentially get a green card that way, depending on the person’s specific opportunities. Also, if an investment is active, then there may be other opportunities for such an investor to acquire legal status in the US based on that investment. There are a number of different types of investor visas available, and of course, each case needs to be evaluated individually on its own merits. Just one fact can change an entire result.
What do I need to have for doing Stock trading as an F1 student?
Social Security Number (SSN) is typically required by most stock brokerage firms for stock trading. The IRS requires it for the purpose of tax and to calculate your capital gains. SSN can be got by working on campus combined with the job application process. At Social Security Administration (SSA) Office, you can apply for SSN with the offer letter that you got from the on-campus job.
Documents like Passport, I-20, and I-94 will also be required to obtain SSN. Typically, SSN is used for tax purposes that employers use to report jobs or to check eligibility of benefits to the IRS/Government.
Can international students still do stock trading as an F1 student if an SSN is not there?
Though SSN is required by a lot of stock brokerage firms you can still open a stock brokerage account by using an ITIN number (Individual Taxpayer Identification Number). But be mindful that the ITIN number is not accepted by all stockbroking firms and for the one that you are interested in, you need to check with them to confirm.
How much Tax has to be paid on my dividends as an F1 student?
Currently, foreign nationals are subject to a 30% tax on dividends or any stock-related capital gains. It will be the 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.
How much can international students invest in US stocks?
As stated above, there is no maximum or minimum amount students can invest in stocks. Some brokerage accounts have limits as to how much you can invest in a given day or week. Otherwise, the government does not restrict how much students invest in stocks.
Best investing apps for international students to invest in US stocks
It may require an F1 visa, a social security number, an account at a US-based bank, or a permanent US address. Be sure to check with each to determine requirements. The top Investing Apps For International Students are:
- M1 Finance
- TD Ameritrade
- Charles Schwab
So above points are some of the important information that F1 students need to know about stock trading. Therefore F1 students can definitely do stock trading as long as they do it passively and pay the tax. It is important that F1 students while they are still on their visas follow employment rules and keep an eye on any changes or news regarding international students. Violation of any rules could lead to deportation.