We are living in a fast-forwarding world where everyone wants financial solvency and students are no exception. Nowadays many students show interest in financial markets and lots of student with F1 Vias in the USA wants to invest in the USA stock market. However, is it possible/legal for F1 students to invest in the USA stock market? Let’s find out!
If you are an international student on an F1 visa studying in the USA then you are allowed to invest in the stock market. It means F1 Visa holders can invest in stocks and day-trade. This type of investment is considered as passive income and there is no law that averts F1 students from investing in the stock market.
What Is F1 Student Visa?
The F1 visa is a type of student visa that allows international students to stay in the USA for study purposes. This Visa allows international students to enter the United States as full-time students at an accredited college, university, seminary, conservatory, academic high school, elementary school, or other academic institution or in a language training program. In order to apply for the F1 student visa, you have to enroll in a program or course of study that concludes with a degree, diploma, or certificate. Moreover, the educational institution must be authorized by the U.S. government to accept international students. According to U.S. Citizenship and Immigration Service, a student can enter the F-1 visa category if he/she meets the following criteria:
1. The student must be enrolled in an “academic” educational program, a language-training program, or a vocational program
2. The school must be approved by the Student and Exchange Visitors Program, Immigration & Customs Enforcement
3. The student must be enrolled as a full-time student at the institution
4. The student must be proficient in English or be enrolled in courses leading to English proficiency
5. The student must have sufficient funds available for self-support during the entire proposed course of study
6. The student must maintain a residence abroad which you have no intention of giving up
Can F1 Students Invest In Stocks?
International students with F1 Visa can invest in the stock market and buy, sell stocks. For international students investing in the stock market is absolutely fine as long as it is not done as a full-time activity like a day trader. Students can invest in stocks as a passive income. The most important thing you should know is that when you are on an F1 visa, you are a full-time student enrolled in an educational institute. You have to maintain your proper F1 student status with an excellent academic standing and enroll in required course credits. Therefore, stock trading should be your passive income activity and should not be your mainstream activity. After completing your study, you should apply for an H1B visa and work on the same. The good news is with an H1B visa you will be able to do stock trading.
What Do I Need To Have For Doing Stock Trading As F1 Student?
In order to do stock trading in the USA, you will need Social Security Number (SSN). This is because when you have capital gain the SSN is required by the IRS for tax purposes. If you work on campus then you will automatically get SSN as part of the job application process. So, if you don’t have SSN then you have to apply for it once you become eligible for it. The easiest way to get the SSN is when you get an on-campus job or CPT/ OPT authorization. You can use the on-campus offer letter or CPT/OPT authorization document to apply for SSN. You also have to submit all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration (SSA) Office.
Is It Possible To Do Stock Trading As An F1 Student Without An SSN?
Most of the stock brokerage firms in the USA require SSN to do stock trading. However, if you don’t have SSN then you are not out of luck. If you don’t have SSN then you can apply for an ITIN Number (Individual Taxpayer Identification Number) and can use it to trade stocks. Therefore, find out a brokerage firm that accepts ITIN numbers for trading and apply to that firm.
Tax Preparation For F1 Students Who Trade Stocks
All F1 students have to file taxes. So, if you buy and sell stocks then you have to include that information in your tax filings. You have to declare your investment and gains of your stock-related investments for tax purposes. Moreover, you have to pay taxes on the gains. If you trade stocks then the broker will provide you a Form 1099 or similar after the end of the year. Make sure you fill it with your 1040NR. If you are not familiar with tax filling then you can consult with a tax consultant and file the tax form.
What Percentage Do F1 Students Have To Pay For Stock Dividends?
According to the current tax law, international students with an F1 visa are subject to 30% tax on the dividends or any of the stock-related capital gains. This law is the same for F1 and H1B visa holders. Therefore, before investing in stocks as an F1 student you should consider all these facts. You have to submit a form W-8BEN form with your stock broker for IRS tax purposes.
FAQs About Can F1 Students Invest In Stocks
Can F1 Students Do Day Trading?
F1 students are allowed to buy and sell stocks. Therefore, F1 students can do day trading. You can do day trading with applications like Robinhood. Robinhood allows day-to-day trading a maximum of 4 times a week if your account has less than $25000.
Can I Use Robinhood On An F1 Visa?
Yes, international students with F1 visas can use Robinhood. Robinhood will allow you to buy and sells stocks. Moreover, with Robinhood, you can also do day trading.
Can F1 Students Buy Bitcoin?
Yes, it is completely legal for F1 students to trade cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc. There is no specific law that prevents F1 students from investing in cryptocurrencies.
Can F1 Students Be Self-employed?
Yes, according to USCIS, an F-1 student on post-completion OPT may also be self-employed. A student on OPT can start a business and be self-employed. However, the student has to show that he or she has the proper business licenses and is actively engaged in a business related to the student’s degree program.
How Can I Go From F1 To A Green Card?
There are quite a few ways you can go from F1 to a green card. They are –
1. Receive Employer Sponsorship
2. Marry a US Citizen
3. Seek Asylum
4. Win the Green Card Lottery
5. Receive Sponsorship by a Relative Who Owns a Business
6. Participate in Military Service
7. Receive Parent or Child Sponsorship
Last Updated on January 26, 2022 by
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.