F1 Student - Why not use Schedule D for reporting capital gains from stock sales?

Your friend is mixing up some tax concepts. Here's what you need to know: As an F1 student in the US for less than 5 years, you're generally considered a nonresident alien for tax purposes, which means you should file Form 1040NR. For your capital gains specifically, you actually DO need to use Schedule D to calculate your capital gains and losses. However, where your friend is partially right is that those capital gains get reported differently than a US citizen's would. The results from Schedule D would then transfer to the Foreign Income section of the 1040NR, not to the regular income section as it would for US residents. Schedule NEC (Non-Employee Compensation) is typically used for reporting freelance or contract income, not investment income like capital gains from stocks. So that part is definitely incorrect.

Hey! I was in a similar situation last year and found out about taxr.ai (https://taxr.ai) which really helped me sort through my international student tax situation. I had traded stocks while on my F1 visa and was totally confused about which forms to use. Their system analyzed my situation and confirmed I needed to use Schedule D with my 1040NR, not Schedule NEC like your friend suggested. What I particularly liked is that their system explained WHY I needed to use Schedule D and how the tax treaty with my home country affected my reporting requirements. You just upload your documents and it gives you a complete analysis tailored to your specific visa status.

Just wanted to update after trying taxr.ai that someone recommended. I was really skeptical since my tax situation seemed too complicated (F1 visa with stock trades, crypto, and some freelance coding work), but it actually worked better than I expected. They confirmed I needed Schedule D for my stock gains but also helped me understand how to report my crypto properly (which was a whole different thing I didn't even know about). The analysis broke down exactly which forms I needed and where each type of income should go on my 1040NR. Saved me from making a big mistake with my freelance income too, which apparently needed to be reported differently than I thought.

For anyone struggling to reach the IRS for clarification on international student tax questions like this, I'd recommend trying Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS international taxpayer line about my F1 tax situation, and it was impossible. Claimyr got me connected to an actual IRS agent in about 20 minutes. The agent confirmed exactly what others are saying here - that Schedule D is indeed the correct form for reporting capital gains, even for F1 students, and that Schedule NEC is for non-employee compensation like freelance work. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c In my case, I had the added complication of a tax treaty with my home country, and the IRS agent was able to walk me through exactly how that affected my capital gains reporting.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself because I was desperate to resolve a similar international tax question about my OPT income and some stocks I sold. It actually worked exactly as described. Their system called the IRS, navigated all the prompts, waited on hold (took about 35 minutes), and then when an agent finally picked up, my phone rang and I was connected directly to the IRS agent. The agent confirmed I needed to use Schedule D for my capital gains as an F1 student, and helped clear up some confusion about treaty benefits too. I've spent literally months trying to get this information, so I'm still kind of shocked it worked. Definitely worth it for international students with complicated tax situations.

I just wanted to add that as an F1 student, your tax residency status is super important here. If you've been in the US for 5+ calendar years, you might be considered a "resident alien" for tax purposes under the substantial presence test, which would mean filing a different form altogether (1040 instead of 1040NR). In that case, Schedule D is definitely what you'd use for capital gains. But even as a nonresident on Form 1040NR, Schedule D is still correct for calculating capital gains - your friend is definitely wrong about Schedule NEC.

Quick question - does anyone know if there's a minimum amount of capital gains that requires reporting for F1 students? I made like $200 from stocks this year and wondering if I even need to bother with all this Schedule D stuff.

Just to clarify one more point that might be confusing - while everyone is correctly saying to use Schedule D for your capital gains, make sure you understand that as an F1 student filing Form 1040NR, you'll be using Schedule D-NR (the nonresident version), not the regular Schedule D that US residents use. The calculation process is essentially the same, but Schedule D-NR has some specific instructions for nonresidents. Your $720 gain from $5,800 in stock sales would definitely need to be reported using this form, and then the net gain would transfer to your 1040NR. Also, keep good records of your cost basis and sale dates - you'll need those details for the Schedule D-NR. Don't let your friend convince you to use Schedule NEC, that's definitely for contractor/freelance income, not investment gains.