There’s no legal way around paying taxes when selling gold. Dealers must file a 1099-B form whenever a customer sells coins or bullion bars that appear on the IRS Reportable Items List to them.
Precious metal dealers must notify the IRS if customers make cash payments exceeding $10,000, so as to identify potential money laundering schemes.
Capital Gains Tax
Selling gold for a profit can be considered income and will incur capital gains tax, the exact amount depending on how long and type of metals were held in storage.
The IRS considers physical quantities of gold (including coins and art) collectibles and taxes them at up to 28%. When selling, most likely you must file a Schedule D form with your tax return to report its sale.
Precious metal dealers in the US must file Form 1099-B with the IRS when receiving significant cash payments for bullion sales, to help the agency keep an eye on large commodity exchanges and prevent money laundering schemes.
However, you can reduce or defer your tax bill by investing your proceeds of selling gold into more bullion and purchasing physical gold in an IRA or similar retirement account.
Many gold dealers promote the myth that it’s possible to avoid reporting sales to the IRS when selling gold, but this is simply not possible. Anytime someone suggests there may be some kind of loophole for avoiding taxes on your sale of gold, that should serve as a red flag.
Precious metal dealers are required by law to file 1099B forms with the IRS when reporting certain precious metal sales transactions that fall under their “Reportable Items List”, where transactions exceed certain thresholds.
Reportable gold sales typically include 1 oz Krugerrands, Maple Leaves and Mexican Gold Onzas sold through COMEX 1000 oz bars that sell for more than $2,500 in one transaction; American Gold Eagles do not require reporting since they’re considered bullion coins; however reportable sales occur when customer cash payments of $10,000 or more in a single transaction occur.
Taxes on Inheritances
Decidng between keeping and selling inherited coins and precious metals depends on your individual needs and financial goals, as well as the inheritance tax requirements associated with selling your assets. Before taking either option into consideration it’s crucial to understand these regulations first.
Good news is that federal taxes don’t have to be paid on precious metals you inherit until they form part of an estate valued at more than $12.9 million. Your state may impose inheritance taxes that differ from federal rates.
When calculating taxable profits on inherited gold, its original cost basis must be taken into account. Therefore, it’s essential to keep any invoices or receipts from when it was bought as they will assist in establishing its original cost basis and indexation which reduces profits and thus your tax liabilities.
Investing in precious metals can be an excellent way to diversify your portfolio and generate passive income, but you must understand the implications of tax and reporting regulations on this form of investing.
Your profits from selling precious metals are considered capital gains and should be reported on your tax returns accordingly. How much you owe will depend upon how long and at what level the metals were held as well as your income level.
Precious metal dealers are required by federal anti-money laundering regulations to report any significant cash payments over $10,000 made by customers as part of efforts to detect suspicious activity and combat possible money laundering schemes.
A dealer claiming to offer any secret way of selling bullion without reporting it to the IRS should be avoided for your own protection. Instead, work with reputable precious metals dealers that comply with all relevant guidelines and regulations, like those recommended by ICTA who has met with the IRS to develop these guidelines.