Those selling precious metal investments for more than they paid could face tax liabilities as capital gains are considered income by the IRS; however, any losses can help offset your gains.
Your taxes for selling silver depend on its original cost basis; this factor plays an integral part in calculating gains and losses.
Cost basis
Precious metals, including silver bullion coins, are investments and should be reported to the IRS when sold. Any profits realized from such sales must be taxed as capital gains rather than ordinary income. There are ways to lower these taxes such as keeping precious metals for over one year before selling, investing through tax-advantaged accounts, offsetting gains with losses or holding onto them for more than two years – however this requires careful planning and compliance with IRS rules.
As part of selling silver, the first step is calculating your cost basis. This involves adding together your initial purchase price plus storage fees, dealer and auction transaction fees and any other expenses you incurred – this allows you to determine how much profit was made when subtracting this figure from the sale price. Once complete, subtract your profit figure from this total; or you could add certain expenses like appraisal costs into this figure in order to reduce tax liability – however this must be declared annually.
Capital losses
When selling physical precious metals like silver bullion or coins, capital gains taxes may apply. The rate varies based on how long you owned the metal and your individual income tax bracket. To calculate this tax amount, subtract your cost basis from the sales price – including dealer fees, discounts and storage costs. Your losses can offset gains for an overall lower tax liability.
If you sell silver at a value lower than its initial purchase price, there will be no capital gains taxes due. Instead, your capital loss can be used against any gains in that year or carried forward for future tax years.
As part of reporting your profits from selling silver bullion or coins to the IRS, precious metal dealers must submit details about the sale to them for reporting purposes. Although precious metal dealers typically don’t like making this information public, the IRS requires this report so as to better monitor large commodity exchanges and prevent possible money laundering activities.
Wash sales
Precious metal dealers must report profits earned from selling silver to the IRS. Reporting requirements differ between dealers and are dictated by IRS guidelines which can change at any time; generally speaking, any profit from selling silver falls within certain thresholds; these include 90 percent silver coins with face values over $1,000 and 0.9999 fine silver bars over 1000 troy ounces that meet this criteria.
Silver gains may be classified either short- or long-term capital gains, which will dictate their tax treatment. Short-term gains are taxed at the same rate as ordinary income while long-term capital gains are taxed up to 28 percent. Investors selling metal at a loss may use that loss against any capital gains accrued within a calendar year; it is wise to consult a certified public accountant or tax specialist prior to making this decision.
Taxes
Taxes due from selling silver depend on how much of a profit it yields, which means keeping records of both how you purchased your silver and its subsequent selling prices will help determine your tax liability.
Silver can be an excellent investment as its value remains steady over time, unlike stocks or mutual funds. But for maximum return, only sell it if there is an economic profit to be had from selling. To determine this figure, subtract your sale proceeds from your original purchase price (referred to as your cost basis), plus any associated costs such as storage fees, dealer commissions or appraisals.
When customers purchase or sell large amounts of precious metals such as gold and silver bars and coins, the IRS requires dealers to file an IRS Form 1099-B form. This allows the agency to monitor large commodity exchanges more closely and prevent money laundering activities.
