Can an F1 Visa Holder Open a Stock Account?
The United States Citizenship and Immigration Services accepts applications from foreign students for the F1 visa, which allows a temporary stay for educational purposes. There are several requirements for approval, while certain restrictions apply to the student's activities once he arrives. Although there's no law against stock trading by immigrants -- temporary or permanent -- federal agencies have set up a few hurdles for foreign-born traders looking to get into the markets.
In order to obtain an F1 visa, you must be accepted and enrolled at an educational institution, or language school. The school must be on a list of institutions that are approved by the federal Immigration and Customs Enforcement agency to enroll foreign students. An F1 candidate must be able to show sufficient means to support himself while in the United States, and provide proof of a permanent residence in a foreign country.
Getting the Number
There's no law barring foreign ownership of stock, or restricting stock trading by foreign visitors, whether they are in the United States on a temporary, immigrant or non-immigrant visa. To open a brokerage account, however, individuals must normally provide a Social Security number, which the brokerage will use to report interest and dividends to the Internal Revenue Service. In order to get an SSN, the F1 visa holder must file an application with the Social Security Administration, and provide a passport, the I-94 USCIS card that authorizes temporary residence in the U.S., and a valid offer of employment (strict limitations apply to work by F1 students).
The ITIN Alternative
Without a Social Security number, an F1 visa holder may apply for a brokerage account with an Individual Taxpayer Identification Number. The ITIN serves the same purpose as the SSN for income-reporting purposes, but does not authorize employment or confer any eligibility for Social Security. You may apply for an ITIN with IRS Form W-7, which requires proof of your identity and current visa status. Some colleges as well as brokerages are authorized by the IRS as acceptance agents, meaning they can assist with the ITIN application.
Gains and Income
A foreign visitor earning income or capital gains from stock trading will be liable for income taxes, just as citizens and permanent residents would be. The normal filing requirements and tax rates apply to non-immigrant stock traders. In addition, stock brokerages will require a foreign trader to complete Form W-8BEN, the Certificate of Foreign Status of Beneficial Owner. The IRS requires tax withholding at the rate of 30 percent from all interest or dividend payments to foreign account holders.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.