Stock Trading as an F1 Visa Student – Allowed? | Raju Law (2024)

• October 11, 2020

The question is “Is it legal for F1 students to invest in stocks ?” We will cover various aspects about F1 student stock trading in this article. If you are in OPT or H1B you can invest as much you like. However, if you are on an F1 visa, you are not allowed to do “Day trading,” often defined as “4 or more trades per week.” Below that, you’re certainly fine. Just make sure that you are not actively trading, day or swing to make profits quickly. That could be seen as “working” without proper authorization. Also make sure you are working by yourself, not working for any company or group or any foreign person. There are no restrictions on trading any publicly-traded stock or derivative stock. Online trading is also allowed.

What do I need to have for doing Stock trading as an 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 the IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process. Typically, once you get the on-campus job or work authorization using CPT or OPT, you use that offer letter and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration (SSA) Office. SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to the IRS/Government.

I do NOT have an SSN, Can I still do stock trading as an 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 a stock brokerage account. While some of the firms accept ITIN numbers, it totally depends on the stock broking firm and you need to check with the one that you are interested in.

What do I have to do from the Tax side, if I do stock trading in the US as F1 students?

As you know, you need to file taxes as an F1 student, with stocks coming into picture, they need to get added to your tax filings. You need to declare the investment and gains of your stock related investments for tax purposes and pay required tax on the gains. Your broker should provide you with a Form 1099 or similar after the end of the year. File this along with your 1040NR. 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 be paid on my dividends typically as an F1 student?

Currently, foreign nationals are subject to 30% tax on the dividends or any of the 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.