Robinhood For International Students: Invest Wisely And Legally

Robinhood is a popular investing app that offers commission-free stock, ETF, and options trading, as well as valuable research tools for investors to examine investing alternatives. While Robinhood is an attractive option for those looking to keep expenses low, international students considering investing through the platform face several considerations. For instance, international students on an F1 visa in the USA can legally trade on Robinhood, but it should not be a daily activity and must only be a passive source of income.

International students with an F1 visa can invest in Robinhood

However, it is important to note that F1 visa holders are typically not allowed to work full-time or engage in certain types of employment. This includes day trading, which is considered a full-time job by the IRS. As such, while F1 visa holders can use Robinhood, they should avoid day trading and limit their trading activities to a passive source of income.

Additionally, F1 visa holders will need to consider the tax implications of their investments. They will need to file a W-8 form to declare zero taxes as non-US citizens, and they may also be subject to federal and state taxes on their investment income. It is advisable for F1 visa holders to consult with their school's tax department and international affairs office to understand their specific tax obligations and ensure compliance with visa regulations.

Overall, while international students with an F1 visa can invest in Robinhood, they must remain cautious and informed about the applicable rules and restrictions. This includes understanding the limitations on their visa status, the tax implications of their investments, and ensuring that their trading activities do not violate any regulations. By staying informed and seeking appropriate guidance, F1 visa holders can safely and effectively utilize the Robinhood platform for their investment needs.

International students need a Social Security Number (SSN) to sign up

International students on an F1 visa in the US can trade with Robinhood, but they need a Social Security Number (SSN) to sign up. International students with an SSN can trade with Robinhood, but they should be cautious about day trading, as this could be considered a full-time job, which F1 students cannot do.

Some sources suggest that international students on an F1 visa are non-residents and should file a W-8 BEN form with Robinhood to pay zero taxes as non-US citizens. They will, however, need to pay federal and state taxes. Robinhood will issue tax forms, usually 1099 forms, at the end of the year.

International students on an F1 visa should check with their school's Tax Department and International Affairs Office before trading with Robinhood, as visa regulations can change dynamically. It is also recommended that they research how capital gains taxes will affect them, as they may owe taxes in their home country and the US.

While Robinhood's commission-free trading can be attractive to international students, they should be aware that their trades may be sent to market makers, which could impact the quality of their order execution.

International students cannot be working outside of school

International students on an F1 visa in the USA can use the Robinhood app for trading, but there are some important restrictions and considerations to keep in mind. Firstly, as an international student, you are not allowed to work outside of school, and day trading or full-time trading could be considered working. Therefore, it is recommended to avoid day trading and treat trading as only a passive source of income. Additionally, you will need to have a Social Security Number (SSN) to sign up for Robinhood and submit a W-8 form for zero taxes as a non-US citizen.

It is essential to be cautious about investing as an international student. While trading is legal for F1 visa holders, it should not be your primary focus or source of income. You must also be aware of the tax implications, as you will be subject to federal and state taxes, and you may owe taxes in your home country as well. It is advisable to consult your school's Tax department and International Affairs office for specific guidance, as visa regulations can change dynamically.

Another consideration is the quality of trade executions on commission-free platforms like Robinhood. While Robinhood's app is user-friendly and highly rated, there may be potential drawbacks to their commission-free model. Your trades may be routed to market makers who pay Robinhood, which could result in lower-quality fills on your orders. Therefore, it is essential to research alternative platforms and their offerings, such as Options House, which allows accounts to be opened using an ITIN (issued to non-residents or undocumented people).

In conclusion, while international students on F1 visas can legally use Robinhood for trading, it is important to approach it with caution. Adhere to the restrictions on working outside of school, be mindful of tax obligations, and carefully consider the advantages and limitations of different trading platforms to make an informed decision.

International students cannot do day trading

International students on an F1 visa can invest in the stock market and trade with Robinhood if they have a Social Security Number (SSN) to sign up. However, international students cannot engage in day trading, which is defined as buying and selling stocks or other securities multiple times in a single day to profit from short-term price fluctuations. Day trading is considered a full-time job, and F1 students are not permitted to work full-time.

F1 visa students are allowed to invest in the stock market as passive investors, but it should not be their mainstream activity. Their primary purpose is to study in the US as full-time students, and they need to maintain their F1 student status by enrolling in the required course credits and maintaining good academic standing.

International students who are interested in investing in stocks should be aware of the various tax and reporting requirements related to their investments. They may be subject to additional restrictions and regulations when it comes to day trading and should consult with a financial advisor, tax professional, or immigration attorney to understand their rights and obligations under US law.

While Robinhood does not explicitly prohibit F1 students from using its platform, it is essential to be cautious and understand the regulations surrounding international student investments in the US. Additionally, it is worth noting that some other trading platforms, such as Options House, allow users to open an account using an Individual Taxpayer Identification Number (ITIN), which is issued to non-residents or undocumented people.

International students need to pay federal and state taxes

International students on F-1 visas are classified as "nonresident aliens" for tax purposes. This means that they are subject to special rules regarding the taxation of their income. While there is no specific international student tax, they are generally required to file a federal tax return, and in some cases, a state tax return as well.

Federal income tax is levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities. It applies to all forms of a taxpayer's income, such as employment earnings. International students may have to file a federal tax return even if they do not have any U.S. source income. This is because the U.S. tax system is a pay-as-you-go system, with automatic tax withholdings from paychecks, stipends, or financial aid. The amount of tax withheld is estimated based on information provided in tax documents, such as Form W-4, and other factors such as tax filing status and residency.

In addition to federal taxes, international students may also be subject to state and local income taxes, depending on the state they are residing in. Nine states do not have any tax-filing requirements, while the remaining states have varying tax rates and deductions. It is important to note that the tax rates and deductions differ for each state, so the amount of tax payable will depend on the student's location.

To comply with tax obligations, international students must determine their federal tax filing status as either a nonresident tax filer or a resident tax filer. They may also need to complete Form 8843, which is required by the U.S. government for certain nonresident aliens on specific visa types. The deadline for filing tax documents is usually April 15, and non-compliance may result in penalties and complications with future visa applications.

Regarding investing through the Robinhood app, international students with F-1 visas are generally allowed to trade but are advised to avoid day trading. To sign up for Robinhood, a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN) may be required. International students should consult with their school's Tax department and International Affairs office for specific guidance on their tax obligations and any restrictions on investing activities.

Frequently asked questions