People on H1B or any other visa: Are you allowed to invest in stocks and make money?

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Yes

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@D1 only if you then cashed in the investment. If so then you can write off $3k (i.e. get a $3k deduction in taxable income) of the losses every year until you've exhausted the total of the loss. If you happen to have capital gains you can write off over $3k up to the amount of the gain. If you didn't cash in the stock you only have a paper loss and it won't effect taxes.

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Of course you are. You'll need to pay taxes on gains too.

Yes you are and to pay tax and lose money or make money.

Follow up question: I'm on an H1 and lost a big chunk of money in stocks last year. Should I expect some sort of relief when I get my tax returns?

Ummm definitely not.

Sorry that last post was to @D1, not @OP

Sigh.. can't blame a person for hoping.

Okay, I definitely cashed in. So this is good news (relatively speaking, of course)

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