- Can a Non-U.S. Citizen Trade U.S. Stocks?
- Can an F1 Visa Holder Open a Stock Account?
- Can I Stop Receiving Social Security Benefits After Starting Them?
- How Long Does it Take to Process Social Security Retirement Benefits?
- Do Married Couples Pay More or Less in Payroll or Social Security Taxes?
- The Effects of Delaying Retirement
As long as you have a Social Security number or Individual Taxpayer Identification Number, you can buy and sell stocks online – even if you’re a nonpermanent resident or a noncitizen. According to the Department of Homeland Security, noncitizens can usually get an SSN if they’re legally in the U.S. and authorized to work. If you do not qualify for an SSN, you can apply for and use the ITIN to open a brokerage account with an online broker.
Getting an ITIN
If you don’t have permission to work in the U.S. or do not qualify for an SSN on another basis, you can apply for an ITIN instead. This number is designed to make the paying of taxes by noncitizens and nonpermanent residents more efficient. If you’re buying and selling stocks online, there is a good chance you’ll incur some tax consequences. You can use IRS Form W-7 or an IRS acceptance agent to apply for the ITIN. You’ll need to provide original proof of identity and foreign status documents.
Opening an Account
Once you have your SSN or ITIN, you can open a brokerage account with an online broker. You can research the various options to find the one that best meets your needs. Many reliable financial websites -- such as Kiplinger.com and Barrons.com -- provide annual rankings of the best online brokers based on trading fees, service, technology and other factors. In addition to your SSN or ITIN, the firms will require the following information: driver's license, passport or other government-issued identification, as well as employment status and some financial information.
Choosing Account Type
You’ll also need to indicate how you want to pay for the trades you make, how you want to handle the uninvested money in the account, and whether anyone else will be authorized to trade with your account. You’ll also choose between a cash or margin account. Cash accounts require you to pay for the stocks you buy in full at the time of purchase. Margin accounts allow you to borrow money from the brokerage using the rest of your stock as collateral and pay the full stock price in the future. Because you’re borrowing money, you pay interest on the advanced funds while they remain outstanding. These accounts are extremely risky and not recommended for newer investors.
Understanding the Rules
The Securities and Exchange Commission and Financial Industry Regulatory Authority require brokerage firms to report any trading income you earn to the IRS. You will use the SSN or ITIN as an identifier when filing and paying income taxes. In addition, the Patriot Act of 2001 helps financial institutions prevent known criminals from opening accounts by using SSNs to verify account holders' identity.
- Social Security Administration: Social Security Numbers for Noncitizens
- Internal Revenue Service: IRS Clarifies Temporary ITIN Application Requirements for Noncitizens with Tax Extensions and Many Foreign Students
- Internal Revenue Service: General ITIN Information
- Financial Industry Regulatory Authority: What to Expect When You Open a Brokerage Account
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