Student visa holders
Most non-US citizens intending to study at a university in the US will apply for an F-1 visa. For US Federal Income Tax purposes, as an F-1 visa holder you’ll be considered an ‘exempt individual’ for up to five calendar years, as long as you remain in compliance with the rules of your visa.
As an ‘exempt individual’ you’re entitled to exclude your US days from the US substantial presence test, which is a test used to determine if an individual is US tax resident or not. This exclusion is not automatic, and an annual claim must be made by filing Form 8843: Statement for Exempt Individuals and Individuals with a Medical Condition.
Assuming that the above requirements are met, you’ll be treated as a non-resident alien (NRA) for US Income Tax purposes. In practical terms this means that, as prior to your US studies, you’re only liable to US Income Tax on your US sourced income.
For US Income Tax purposes, realised gains and losses on capital items are taxed alongside income. There’s no separate Capital Gains Tax.
Whether your realised capital gains and losses are US sourced for Income Tax purposes may change when you move to study in the US. This is because gains and losses on personal property (being anything that is not real estate, such as stocks and shares) are sourced in accordance with your tax home and the aforementioned exemption to the US substantial presence test does not impact your tax home under general law.
It’s important to remember that in addition to Federal taxes, each US State has the right to implement their own State Income Tax. These vary State by State, with some states being Income Tax free (such as Texas) and others charging double digit rates (such as California where the top rate is 12.3% plus a 1% surcharge for income in excess of $1million.)
Whether you will be considered a State tax resident will also be subject to the specific rules of that State. Given that not all States follow the Federal guidelines on double taxation relief, it’s important to know this before you arrive.