Precious metals such as gold coins are considered capital assets, with any financial gain from their sale considered taxable income. Therefore, you will need to report these transactions annually and fulfill your tax liabilities accordingly.
For your taxable gain from selling gold, begin with its original purchase price or “basis”, including selling expenses.
Form 1099-B
IRS requires precious metal dealers who receive more than $10,000 in cash payments to file Form 1099-B annually, which includes traveler’s checks, cashier’s checks and money orders – but does not include personal bank wires, credit cards or ACH transactions. This report helps prevent tax evasion by identifying those with profits on sales who owe taxes accordingly.
For an accurate calculation, your cost basis – that is, how much you paid for gold coins plus shipping and sales tax costs – must be known before selling them for profit or loss. If they came as gifts or inheritance, consultation with a tax professional may also be required.
Be mindful that any gains on gold sales are subject to capital gains tax, which differs from ordinary income tax. Your rate of tax owed will depend on how long and your income level you held the coin for; generally short term gains are taxed more heavily than long-term ones; with some exceptions such as government-minted.999 silver bullion coins and palladium bullion coins being exempted from 1099-B reporting requirements.
Form 8949
As with the sale of valuable property, the IRS requires that any profit on gold coins be reported. Your tax liability depends on how long and in what tax bracket you held onto them for. To calculate gains on coins sold for profit, they subtract initial basis from sales price to arrive at gain – initial basis can include shipping, insurance and sales tax paid on original purchase as well as storage fees incurred during ownership of said coin(s).
Precious metal dealers must file Form 1099-B for any sales of physical precious metals such as gold coins. These forms report the total cash received during one transaction and help prevent money laundering schemes. Some dealers may not need to file this form if items sold were valued under $10,000 and paid with cash or noncash payments such as money orders or traveler’s checks.
Silver that gains in value quickly can be taxed at up to 28% in collectible form; long-term investments of precious metals have lower tax rates. Before making significant investments in silver, always consult your tax professional first.
Form 1040
Selling precious metals has many tax repercussions. Gold and silver coins must generally be reported to the IRS; however, its rules and limitations can be quite complex; whether or not you must report your gold transactions depends on several factors including which kind you’re selling and for how much.
Certain coin and bar sales must be reported to the IRS using Form 1099-B, while others do not. Coins subject to reporting include US 90% silver dimes with face values greater than $1,000 as well as 25 or more one-ounce Gold Maple Leaf coins, Gold Krugerrand coins or Gold Mexican Onza coins sold within any calendar year; bar sales over 1 kilogram or 1000 troy ounces must also be reported directly to the IRS.
Reporting requires filling out two forms: Schedule D on Form 1040 and Form 8949. Both require information about the transaction, such as price paid for gold and original cost basis; this data will then be used to calculate either short term capital gains (0%-15-20%) depending on how long you’ve owned it; in addition, precious metal dealers are legally required to report any cash payments over $10,000 as this helps combat money laundering or other illicit activity.
