H1B Investing: The Complete Guide

Posted by in Investing | Updated on August 10, 2023
At a Glance: Investing in stocks in the U.S. is a popular form of investment. To begin stock trading, you need a Social Security Number to register with a stockbroker. H-1B visa holders can participate in stock trading but must maintain their employment to keep their visa status. Stock earnings are taxable, including capital gains tax and other flat tax rates. Alternative investment options for visa holders include real estate investment and taking advantage of 401k plans with employer matching contributions. Contributing to a 401k early is a smart way to save for retirement.

H1B investing is a little talked about topic, but one with a lot of upside for immigrants in the U.S. on H1B visas. While most people choose to simply save their earnings, others view investing as a better option to turn that money into more profit.

In this guide, we will outline everything you need to know about investing while on a visa and bring up some of the best options for investments in the US.

How to Invest in Stocks in the U.S.?

Investing in stocks is one of the most popular forms of investment in the United States. The stock market is ever-changing, and you may want to jump into stock trading as one form of your investment. Here, we will discuss how you can begin stock trading, and how your earnings will be taxed.

What is Stock Trading?

Stock trading is the practice of buying and selling stocks or small ownerships in a company’s ownership. People participate in stock trading for two main purposes, to make money and to gain influence within a company.

Investing in Stocks while on an H-1B visa in the U.S.

You may be wondering if you can participate in stock trading while on a visa. The answer is yes, it is legal to do stock trading and it is also a very simple process to begin doing so.

The only thing you need to keep in mind is that you must continue working for your employer who has sponsored your visa in order to maintain your visa. If you do earn a lot of money through stock trading, that does not mean you can simply leave your current job, as doing so would take away your visa status.

Stock Trading Process for H-1B visa holders

In order to begin stock trading, you will need to have a Social Security Number in order to register with stockbrokers such as Scottrade, Ameritrade, or TradeKing. Registering with a stockbroker will create your personal account to buy and sell stocks with.

Day Trading vs Delivery Based Trading for H-1B

There are two main types of stock trading: day trading and delivery based trading. Most visa holders will participate in delivery based trades since day trading often requires it to be a full-time job.

Since H1B visa holders have a full-time job, this makes day trading an unattainable option for most visa holders who don’t want to give up their visa status.

Tax Liability on Stock Trading for H-1B Visa Holders

Just like with your regular work earnings, you will need to pay taxes on your stock earnings as well. According to the IRS, stock earnings do qualify as a source of income, and therefore these earnings are taxed.

What Taxes do I Pay When Investing in Stock on an H1B visa?

There are various taxes you may have to pay on your taxable earnings. The first type is a capital gains tax which is a percentage taxed on your profits from selling stocks that were held for at least a full year. Other taxes you may face are flat tax rates such as Medicare tax or net investment income taxes if your investment income is over a $200,000 threshold.

Many people choose to use tax consultants to file their taxes on stocks as it can get very complicated. Making any mistake can jeopardize your visa status so it’s important to do thorough research on filing taxes for your stock trading earnings.

Two Great Non-Stock Investment Options for Visa Holders

Taxes are not the only option for investing while on a visa. Some other common forms of investment are investing where you want to live, and 401k investing. Here, we will discuss the two.

Invest Where You Want to Live

Buying a home can be a great investment. Investing in real estate is a popular form of investment that you may want to consider as a visa holder.

Often times, when buying a home as a visa holder, you will end up selling that home later for more money than you purchased it for. As you can see, this is a great investment if that profit is considerably large. Many people with the funds will choose to purchase second homes for the sole purpose of investing in the home as a method of earning money.

Take Advantage of 401k and 401k Matching

401ks are one of the easiest methods of investing and are one of the most important strategies for retirement planning. Most employers will match your 401k contributions which can add up to a significant amount of money once you retire.

One of the best things you can do is start contributing to your 401k as early as possible in order to get the most out of your employer’s matching program. Failing to contribute to your 401k plan is basically turning down free money that your company is providing for your retirement. Therefore, as an employee, you should make sure you are investing in your future through your 401k!

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If you want to start building on your income to bring in more profits, investing is the path for you. However, deciding on which form of investment you want to participate in is a big decision, and we hope with this article, we’ve provided information to help make your decision.

Here at Stilt, we strive to help others build their financial future, and so wish you the best of luck with your investments!

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Rohit Mittal

Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.