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Investing in Stocks while on H-1B visa in the U.S.
At a Glance
- H-1B visa holders can engage in stock trading in the U.S. if they have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) and a personal bank account.
- The USCIS does not regulate stock trading, but H-1B visa holders should avoid violating their visa status by day trading regularly.
- H-1B visa holders should work full time for their sponsoring company and treat stock trading as a hobby or part-time work to maintain compliance.
- Tax liabilities apply to income earned from stock trading, and professional help is recommended for filing taxes.
An H-1B visa holder is perfectly eligible to do stock trading in the U.S., provided he has a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), and a personal bank account in the country; to be able to open a trading account with one of the online stock brokers in the U.S.
The USCIS does not have a say on stock trading for H-1B visa holders, as it only publishes guidelines related to visa status. However, an H-1B visa holder should not violate the main status of his visa by indulging in day trading on a regular basis; he must work full time for the company that sponsored his visa, investing in stocks only as a hobby or part-time work for some additional income.
What is Stock Trading?
Stock trading is basically buying and selling of stocks (also known as shares) that are listed on a stock exchange, such as Bank of America, General Electric, AbbVie, Nokia, Coca-Cola and Oracle which are among the top 20 most active stocks in the US.
Trivia on Stock Trading
- The first stock ticker appeared in 1867
- Lion Country Safari stock symbol is GRRR
- Meta Financial Group is lucky with its stock symbol, CASH
- The highest priced share on NYSE is Warren Buffet’s Berkshire Hathaway, at $170,000 per share
- Share trading may have begun as early as 9000 BC to 8000 BC, with time tokens made out of clay
(Source: http://www.h1bwiki.com/can-h1b-visa-holder-stock-trading-us/ )
Stock Trading Process for H-1B visa holders
- Open a trading account with one of the online stock brokers in the U.S. Some of the popular options being OptionsHouse, Scottrade, ThinkorSwim, Trade King.
- Think of the amount you want to invest (keep it small in the beginning).
- List the stocks you are interested in. To learn about the subject, you may read from Investopedia and start following sites like Bloomberg and other financial sites.
- Start Trading. You cannot trade on behalf of someone or for someone, it should be your personal account.
Day Trading vs Delivery Based Trading for H-1B
It is better for an H-1B visa holder to indulge in delivery based trading rather than day trading. As already stated above, an H-1B visa holder is bound to the company that sponsored his H-1B visa. Therefore, indulging in day trading would be a violation of this agreement. Hence, an H-1B visa holder must focus on his main job (the reason for his stay in the U.S.), and only invest in stocks as a hobby. Also, he must not be paid to do stock trading as this qualifies as a breach to his primary job.
Tax Liability on Stock Trading for H-1B Visa Holders
You are liable to pay taxes on each and every income you make in the U.S. Hence, there is no exception for income earned through stock trading, as it is as much of an income as any other.
So, if you have made any money or have done any transactions, it is a good idea to go to a tax consultant to get help with filing taxes.
Also, if you have lost money in stock trading, it may be tax deductible, offering you a rebate and other advantages. Hence, take professional help before filing taxes in the U.S.