Gold coins sold at a profit are subject to federal capital gains tax, levied by the IRS to ensure non-corporate sellers of precious metals declare their profits accurately.
Physical gold is classified by the IRS as collectibles and therefore subject to a maximum capital gains rate of 28% for capital gains taxation purposes. This rate applies equally to both gold bullion bars and coins.
Form 1099-B
If you purchased gold coins or bullion and sold them for a profit, the IRS requires that you report your sale on your tax return. Your profit from selling your gold will be taxed as capital gains at your regular income tax rate – similarly to how taxes would apply when selling other assets such as houses or stocks.
Most precious metal dealers must report sales over $10,000 made in cash to the IRS. However, this reporting requirement doesn’t extend to non-cash payments such as credit card or wire transfers.
Physical gold investments are taxed at a much higher capital gains tax rate than most assets sold, creating confusion for investors. According to the IRS, physical gold should be treated like any collectible item and taxed accordingly at 28% – significantly more than the typical 15% long-term capital gains tax rate. To minimize taxes on your profits and avoid paying excessive penalties on profits you need to maintain detailed records of purchases and sales transactions.
Form 1099-MISC
When selling gold coins for a profit, capital gains tax is due. This is because the IRS considers collectible coins to be more heavily taxed than stocks or bonds; your exact tax obligation depends on the length of time that passed between holding it before selling.
But not all sales of precious metals must be reported to the IRS. Only transactions with dealers that surpass certain thresholds must file an IRS 1099-B form with them for reporting; this threshold typically falls around $10,000; it may differ depending on which precious metal was sold and whether or not payment was cash or noncash.
Sales of gold bars and bullion do not trigger these reporting requirements; however, sales of gold coins do. More specifically, any US coin with a face value of $1,000 or greater and sales of 25 or more 1-ounce Maple Leaf, Krugerrand or Mexican Onza coins must be reported via Form 1099-B to the IRS.
Form 8949
Gold investments can provide an effective hedge against inflation and geopolitical risks, yet if sold at a profit the IRS will tax any gains at up to 28% as collectibles instead of commodities.
To determine your taxable gold sales, subtract the selling price from its original cost basis and add any expenses incurred from selling. When you know the amount of taxable gold sales, Form 8949 should be completed to file taxes due.
Precious metal dealers are legally required to submit reports to the Internal Revenue Service regarding any sales of bullion bars and coins with cash payments totalling $10,000 or more to help prevent money laundering and other illicit activities. Furthermore, platinum and palladium bullion sales of over 100 troy ounces must also be reported.
Form 1040
When selling gold or other precious metals for profit, the IRS takes their cut. They consider collectibles like rare stamps, antiques and art as rare stamps with maximum taxes of 28% being levied on them – significantly higher than what investors might experience when selling stocks or other financial investments.
As opposed to other sources of income, tax on physical metal sales are not due when sold; rather, the IRS requires any profits made through these sales be reported on your annual tax return.
US precious metal dealers must report customer sales of gold and silver bullion sold to exceed certain quantities such as $1,000 face value in pre-1965 US coins and 25 1-oz Gold Maple Leaf, Gold Krugerrand or Mexican Onza coins in one transaction to the IRS using Form 1099-B reports. These forms typically record this information.