US stock investing on H-1B and OPT: what changes, what doesn't, and the estate tax trap

You moved to the US on an H-1B. You are vesting RSUs at a US tech company. You have a brokerage account at Fidelity or E*Trade. You are also reading Indian personal finance content — guides about LRS, Schedule FA, and DTAA — written for people in Mumbai who want to invest in Apple stock. Most of that advice does not apply to you.

The core insight: Once you meet the Substantial Presence Test, you are a US resident alien for tax purposes. That changes nearly everything about how you invest, what platforms you use, and what you owe the IRS. The Indian-resident-investing-abroad framework is the wrong lens.

This guide covers what actually matters for H-1B and OPT/F-1 visa holders investing in US stocks in 2026: your tax status, how your RSUs work, the estate tax trap that most people miss, and how to plan the eventual India return intelligently.

1. The core question: you are a US resident alien now

The first thing to establish is your US tax status, because everything else flows from it.

Resident alien vs non-resident alien is an IRS classification that determines whether you file Form 1040 (like a US citizen) or Form 1040-NR (like a foreign investor). The key test is the Substantial Presence Test (SPT):

You meet the SPT — and become a resident alien — if:

• You were present in the US for at least 31 days in the current calendar year, AND
• The total of: (days in current year) + (1/3 × days in prior year) + (1/6 × days in the year before that) equals 183 or more

For most H-1B holders, this is met during their first full calendar year in the US. From that point, the IRS treats them identically to US citizens for income tax purposes: worldwide income is taxable in the US.

What this means for investing:

• You do not use the Liberalised Remittance Scheme (LRS). That is a mechanism for Indian residents to send money abroad. You are not an Indian resident; you live and work in the US.
• You do not pay TCS on remittances for investment. Again, that is for Indian residents.
• You do not file Schedule FA or Form 67 for your US brokerage account. Those are Indian ITR disclosures for Indian residents with foreign assets.
• You open a standard US brokerage account and invest directly. Fidelity, Charles Schwab, E*Trade, Interactive Brokers — these are your platforms.

The confusion often arises because many Indian financial influencers and platforms are built for Indian residents investing abroad. Their content — while useful for people in India — does not account for the fact that H-1B holders are already in the US, already US residents for tax, and already have direct access to US markets without any of the Indian regulatory machinery.

2. H-1B and US taxes: worldwide income, US rates

As a US resident alien, your US tax obligations are straightforward in structure, even if complex in execution:

Capital gains on US stocks:

• Short-term (held 12 months or less): taxed at your ordinary income rate (22%-37% for most H-1B earners in tech)
• Long-term (held more than 12 months): taxed at 0%, 15%, or 20% federal, depending on your total taxable income; plus 3.8% Net Investment Income Tax (NIIT) if your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly)

Dividends on US stocks:

• Qualified dividends: taxed at long-term capital gains rates (0%/15%/20%)
• Non-qualified dividends: ordinary income rates

State taxes: depend on where you live. California taxes capital gains at ordinary income rates; Texas and Florida have no state income tax. For H-1B holders in high-tax states like California and New York, state tax is a material part of the total picture.

Foreign income: if you still receive income from India — rental income, interest, dividends from Indian investments — that is also reportable on your US return as a US resident alien. The India-US DTAA provides credits to avoid double taxation, but both countries have a claim.

FEMA status — the parallel track: for Indian regulatory purposes, once you move to the US on an H-1B, you become an NRI under FEMA. This means you should convert any Indian resident savings accounts to NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts. Using a resident Indian bank account for financial transactions while living abroad is a FEMA violation. This is a separate and parallel obligation from your US tax status.

3. F-1 and OPT: non-resident alien status and what you can open

F-1 students occupy a different position. The IRS provides an exemption from the Substantial Presence Test for F-1 visa holders for the first five calendar years they are in the US as a student. During this period, they are classified as non-resident aliens (NRAs) regardless of how many days they spend in the US.

Tax treatment for NRAs investing in US stocks:

• Capital gains on US stocks: generally not subject to US tax for NRAs, provided the gain is not effectively connected with a US trade or business. Portfolio investment gains are typically exempt. This is more favorable than the resident alien treatment.
• US dividends: subject to 30% withholding tax (WHT), reduced by treaty. Under the India-US tax treaty, this rate can be reduced, but the treaty interaction with F-1 NRA status requires careful analysis.
• Form 1040-NR: NRAs file this form, not Form 1040.

Practical access to US brokerage accounts:

Most US brokers require a Social Security Number (SSN) to open an account. F-1 students without work authorization do not have an SSN. Once OPT begins and the student receives work authorization, an SSN becomes available — and with it, access to standard US brokerage accounts.

Before OPT, students can apply for an ITIN (Individual Taxpayer Identification Number) to open accounts at some brokers, but this is a more limited path and not all brokers accept ITINs in place of SSNs.

STEM OPT and the resident alien transition: F-1 STEM OPT extends work authorization by 24 months (total OPT up to 36 months). After the 5-year exemption period ends, STEM OPT holders begin counting days toward the Substantial Presence Test. Depending on their specific situation, they may transition to resident alien status during the STEM OPT period — at which point the rules shift to the H-1B framework described above.

4. RSUs on H-1B: vesting, US tax treatment, and the brokerage world

The typical H-1B holder at a US technology company is not just investing — they are receiving equity compensation. RSUs are the most common form, and they generate some of the most important planning questions.

How RSU vesting works for US residents:

At vest, the fair market value of the vested shares (share price × number of shares) is included in your W-2 Box 1 as ordinary income. Your employer withholds:

• Federal income tax at the supplemental wage rate (22% on supplemental wages up to $1M, 37% above)
• Social Security and Medicare (FICA)
• State income tax

The standard mechanism is sell-to-cover: your broker (E*Trade, Fidelity, or whichever platform your company uses) automatically sells enough shares to cover withholding, and the remaining shares land in your account with a cost basis equal to the FMV at vest.

Critical note on withholding: the 22% federal supplemental rate is almost always lower than the marginal rate for senior H-1B engineers in tech. If your total compensation puts you in the 32% or 35% bracket, you are underwithholding at vest. The gap accumulates across vesting events throughout the year and becomes a tax bill in April. Many H-1B holders are caught off guard by this.

The E*Trade / Fidelity / Schwab ecosystem: your RSUs live where your employer's stock plan administrator placed them. E*Trade Stock Plan Services, Fidelity NetBenefits, and Merrill Lynch Benefits Online handle plans for most large US tech companies. These are separate from your personal brokerage account, though you can often transfer vested shares to a personal account after they settle.

Existing Indian investments and RSUs from Indian employers: some H-1B holders moved to the US from India after working at Indian MNCs, IT services firms, or startups. They may have:

• RSUs from Indian employers that vested while they were in India
• Indian mutual fund investments or equity portfolios
• LRS investments made before they moved

These sit on Indian platforms (including Vested, INDmoney, or directly in demat accounts) and are governed by Indian tax rules for the period of Indian residency. Once you become an NRI, you cannot continue to invest through resident Indian channels for new purchases. Existing holdings can generally be held, but you should update your KYC status with your broker and bank to NRI.

5. The estate tax trap: $60,000 exemption while on a non-immigrant visa

This is the section most H-1B holders have never read. It is also the one with the largest financial exposure.

US estate tax basics: The US federal estate tax applies to the worldwide assets of US citizens and US-domiciled residents. The exemption is $13.61 million per person (2024 levels — subject to change after the Tax Cuts and Jobs Act sunset provisions). At that threshold, most people never pay estate tax.

The non-domiciliary problem: For non-resident aliens who are not domiciled in the US, the estate tax applies only to US-situs assets (which includes US stocks held in US brokerage accounts), but the exemption is only $60,000. That is not a typo. Sixty thousand dollars.

Where H-1B holders fall: Domicile is a legal concept tied to intent, not visa status. To be US-domiciled, you must be present in the US with the intent to remain permanently or indefinitely.

H-1B holders waiting for a green card are in an ambiguous position. Many have filed I-140 petitions and are in the green card queue — but they have not yet received permanent residency, and their intent to remain permanently is legally uncertain (and for USCIS purposes, they must often assert non-immigrant intent to maintain H-1B status).

The practical result: an H-1B holder who:

• Has not received a green card
• Has not clearly established US domicile (which requires demonstrated intent to remain permanently)

...may be treated as a non-domiciliary NRA for estate tax purposes, qualifying for only the $60,000 exemption.

A senior software engineer at a US tech company with four years of RSU vesting, a brokerage account, and a 401(k) is likely holding far more than $60,000 in US assets. Everything above $60,000 is potentially subject to US estate tax at rates up to 40%.

What changes this:

• Receiving a green card: permanent residents are treated as US-domiciled residents, getting the full $13.61M exemption
• Establishing clear domicile: purchasing a home with intent to remain, making other permanent commitments — but this is fact-specific and can be difficult to establish definitively on a non-immigrant visa
• Treaty planning: the India-US estate tax treaty provides some protections for Indian nationals, but its interaction with H-1B status is complex and requires professional advice

The actionable point: if you are on an H-1B with a significant US stock portfolio — RSUs, brokerage accounts, 401(k) balances — and you do not have a green card, consult an estate planning attorney who understands non-domiciliary estate tax exposure. The $60,000 threshold is not widely known, and the stakes are high.

6. Planning the India return: what to sell, what to bring, the RNOR window

Many H-1B holders eventually return to India — by choice, after deciding not to pursue permanent residency, or after years in the green card queue. The period just before departure is one of the most important financial planning windows of their professional lives.

The US resident alien advantage for capital gains:

While you are still a US resident alien (and in the US), your long-term capital gains are taxed at US rates (0%/15%/20% + NIIT). Once you return to India and become an Indian tax resident, your US stock gains will be taxed under Indian rules: 12.5% on long-term listed foreign equity gains above Rs 1.25 lakh (held more than 24 months), 20% on short-term.

For large unrealized gains, the pre-departure analysis should ask:

• What is my effective US LTCG rate this year (including NIIT and state tax)?
• What would my effective Indian rate be on the same gain after returning?
• Is there a case for crystallizing gains in the US before departure?

This is not always a straightforward calculation — realizing large gains in a single year may push you into higher brackets and trigger NIIT.

RSUs at US employers: what happens when you leave?

If you resign from your US employer, unvested RSUs are typically forfeited. RSUs that have already vested and sit in your E*Trade or Fidelity account belong to you and can remain there after you leave. There is no requirement to immediately sell or repatriate.

However, once you are back in India, you will owe Indian tax on future sales of those US shares. You will also face Indian compliance obligations: Schedule FA disclosure in your ITR, potentially Form 67 for US tax credits, and tracking of cost basis in rupees at the exchange rate on the vest date (for Indian capital gains computation).

The RNOR window:

When you return to India, you may qualify for RNOR (Resident but Not Ordinarily Resident) status for a transitional period — typically two to three years, depending on how long you were abroad. During the RNOR period, your foreign-source income (including income from US stocks you hold) is generally not taxable in India if it is not received in India. This is a significant planning opportunity: gains realized in the US during the RNOR window may be taxable in the US (if still a US tax resident for the year of return) but not in India.

Rovia for RSU consolidation:

H-1B holders often have RSU grants across multiple employers, sitting in multiple plan administrator accounts (E*Trade for one company, Fidelity for another, Carta for a startup). Rovia is built to consolidate this equity picture — tracking vesting schedules, cost basis, and grant history across platforms. This is particularly valuable when planning a return to India, where you need a clean record of what you hold, what it cost, and when it vested for Indian tax and compliance purposes.

7. Which platforms to use and when

While on H-1B in the US:

Use US brokerage platforms directly. Fidelity, Charles Schwab, E*Trade, and Interactive Brokers are the natural home for H-1B investors. They offer:

• No LRS limits (you are already in the US)
• No TCS
• Direct access to US stocks, ETFs, options
• Full SIPC protection
• Tax documentation via Form 1099 (not foreign tax credit claims)

Indian platforms like Vested Finance and INDmoney are built for Indian residents who want to invest in US stocks via the LRS route. They serve a genuine need — but not for people who are already living and working in the US. If you are on H-1B, you should not be using an LRS-based platform for new US stock purchases.

Exceptions — when Indian platforms remain relevant for H-1B holders:

• Investments made before you moved to the US, sitting in an Indian demat account or on an Indian platform
• RSUs from an Indian employer (Infosys, TCS, Wipro, HCL) that vested while you were in India and were delivered to an Indian depository
• Ongoing management of Indian mutual funds or equity you plan to hold

For F-1/OPT holders:

Once you have an SSN (available after OPT begins), you can open US brokerage accounts at most major brokers. Fidelity and Interactive Brokers are particularly NRA-friendly. Before OPT, options are limited — ITIN-based account opening is possible at some institutions but uncommon.

Planning the return — Rovia:

As you approach the India return decision, Rovia becomes the central tool for RSU consolidation and portfolio transition planning. Understanding your complete equity picture — all grants, all vesting schedules, all cost bases — is the foundation for every pre-departure decision: what to sell, what to hold, what to transfer, and what the tax impact is on each path.

8. Five-item checklist for H-1B holders with US stock portfolios

1. Confirm your US tax status and start filing Form 1040. If you have been in the US for more than a year and meet the Substantial Presence Test, you are a US resident alien. File Form 1040, not 1040-NR. Report your worldwide income. If you have Indian bank accounts, mutual funds, or equity, report them too.

2. Convert your Indian bank accounts to NRE/NRO. As an NRI under FEMA, you cannot hold or operate a resident Indian bank account. Convert to NRE (for repatriable foreign-currency funds) or NRO (for Indian-source income like rent or dividends). Failure to do this is a FEMA violation.

3. Audit your estate tax exposure. If you hold more than $60,000 in US stocks and do not have a green card or clear US domicile, calculate your estate tax exposure under the non-domiciliary framework. Consult an estate planning attorney who understands this intersection of immigration status and tax.

4. Track your RSU cost basis across all employer platforms. Each vest creates a separate lot with its own cost basis (FMV at vest) and holding period. You need this information for accurate capital gains reporting now, and for Indian compliance after you return. Use Rovia to consolidate this across E*Trade, Fidelity, and any other plan administrators.

5. Model the pre-departure tax window before you book your return flight. The six months before you leave the US are a planning window. Model whether to realize US stock gains before departure (US rates), during the RNOR window (potentially taxable only in the US for that year), or after you become a full Indian resident (Indian rates). The difference can be material for large portfolios.

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Vested.blog is the editorial publication of Rovia.