Overland Park, KS asked in Banking, Estate Planning, Immigration Law and Securities Law for Kansas

Q: As an F-1 student, I plan to invest in the cryptocurrency market and need clarification regarding this.

Are F-1 students allowed to invest in cryptocurrency? Are there any specific rules I need to follow? Additionally, do I need to report these investments to the IRS for tax purposes?

1 Lawyer Answer
James L. Arrasmith
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Answered

A: Yes, as an F-1 student, you are allowed to invest in cryptocurrency. Immigration regulations do not specifically prohibit you from engaging in passive investments like purchasing and holding cryptocurrencies. However, it is crucial to ensure that your involvement remains passive and does not cross into the realm of active trading or employment-like activity, as this could potentially violate the terms of your visa.

When it comes to taxes, you may need to report your cryptocurrency investments to the IRS. Any gains or losses from buying and selling cryptocurrency are typically considered taxable events in the U.S. If you sell your crypto for a profit or convert it into another cryptocurrency, you may owe taxes on the capital gains. Make sure to keep detailed records of your transactions, including the purchase price, sale price, and the dates of these activities, as these details are important for tax reporting.

Additionally, be aware that the IRS has been increasing its focus on cryptocurrency investments in recent years. When you file your taxes, you’ll need to answer a question about cryptocurrency transactions, and failing to report them accurately could lead to penalties. It’s a good idea to familiarize yourself with U.S. tax laws regarding cryptocurrency so that you remain compliant while pursuing your investment goals.

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