The U.S. stock market is one of the foundations of the nation's economic system, and there is no citizenship requirement when it comes to allowing small investors to own shares in a U.S. company. However, there are some extra hoops that non-citizens have to jump through to get U.S. stocks in their portfolios. Following are some of the issues you'll face as a non-U.S. citizen.

Getting a brokerage account
To trade U.S. stocks, the easiest thing to do is to open a brokerage account with a U.S. broker. (Get started by visiting our Broker Center.) However, brokerage firms have different procedures for non-citizens based on their residency status, and non-citizens therefore have to produce more documentation to comply with their internal rules.

Different brokerage firms impose different restrictions on non-citizens. In some cases, brokers will accept applications but require paper filings rather than online application forms. Other brokers are less friendly to non-citizens, especially nonresident aliens, and will demand legitimate visa information before opening an account to trade stocks.

If you can't find a broker you like in the U.S., then some foreign financial institutions will allow you to open brokerage accounts that will give you access to U.S. stock exchanges. For U.S. residents, however, those foreign institutions might also consider it a problem if you don't have a local address in your country of citizenship.

Another option is to buy shares of U.S. companies that are listed on foreign exchanges. You'll find that many blue-chip stocks trade on exchanges overseas.

Dealing with taxes
Non-U.S. citizens trading U.S. stocks potentially have to deal with taxation issues. In general, nonresident aliens pay a 30% tax on investment income, and the tax will typically be withheld at the source by the brokerage firm involved. Citizens of countries that have tax treaties with the U.S. often pay a lower rate of tax. However, capital gains are often exempt from U.S. tax for nonresidents.

For resident aliens, the IRS imposes tax on worldwide income from all sources. Therefore the tax considerations are generally equivalent to those imposed on U.S. citizens, and you'll typically file similar tax returns to those for citizens.

Not being a U.S. citizen shouldn't stop you from investing in U.S. stocks. Just be aware that there are some additional hurdles you might need to overcome to do so.

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