The IRS considers gold and other precious metals collectibles similar to art or antiques; when you sell these assets, any financial gain you realize from doing so constitutes taxable income.
As these taxes fund Social Security, Medicare, and other government services, many Americans wish to avoid having their transaction details reported directly to the IRS.
No report is required of anyone purchasing precious metals unless it is used in any business activity or suspected by the IRS as a method for dodging taxes; if selling gold will occur however, tax ramifications must be addressed before doing so.
When purchasing or selling something with a high fair market value (FMV), capital gains taxes will usually apply. This includes inheriting gold and precious metals as well as any item sold for more than its initial fair market value (FMV). To accurately ascertain its FMV, an item should be professionally appraised in order to establish its FMV.
Although it isn’t required of you, the IRS still expects you to accurately report any sales of gold at a later date, since gold bullion is considered collectible property and thus subject to higher capital gains tax rates of up to 28% than traditional investments which typically incur tax rates between 15%-22%.
If you purchase gold coins or bullion from a dealer, they may be required to report it to the IRS as part of their “Reportable Items List,” particularly if their FMV exceeds certain thresholds; such items typically purchased with cash.
Be wary of dealers that claim they can offer ways to avoid taxes when selling gold; such claims should serve as a red flag and should be avoided at all costs. Unscrupulous dealers may use threats of reporting as leverage against you – which opens them up for abuse by unwary consumers. Do your research, and choose one with reasonable prices for their products as well as experience and expertise in their field – these dealers should be avoided at all costs.
Concerns over privacy and identity theft often keep many from buying precious metals, due to fears about what the IRS could do with this information in the future. While these concerns are valid, due to laws covering money laundering and illegal activities which the federal government closely monitors; thus forcing dealers selling over $10,000 of precious metals purchases through them to report this data to meet IRS reporting requirements.
Your income from selling gold and other precious metals could be subject to capital gains taxes, which are calculated using their fair market value minus your original cost basis. Therefore, it is essential that you track any sales and purchases so as to be aware of how much money has been earned in total.
The IRS views physical gold and other precious metals as collectibles, meaning you will be taxed at a higher rate than normal capital gains rates. Investors holding onto precious metals for more than one year may qualify for lower tax rates provided they do not sell their investments for less than their original purchase price.
Investors who purchase gold through mutual funds or ETFs that do not own physical gold will be taxed at a reduced rate, but should remember that long-term capital gains taxes of 28% still apply; to maximize return while minimizing tax liabilities. Please consult a financial professional when investing this way.