Are Gold Coins and Bars Taxable?
Taxes can be a significant cost for gold investors. Taxes come in the form of dealer markups, storage fees and management costs for physical precious metals as well as trading and management fees associated with gold ETFs.
Physical gold investments are considered collectibles for tax purposes, and any gains are subject to a maximum collector’s tax rate of 28% – much higher than ordinary long-term capital gains rates of 15%-20%.
Taxes on collectibles
Physical gold investments such as coins and bars can deliver positive returns over time, though any profits you realize from these investments may be subject to taxes based on what type of investments are made and for how long.
The IRS treats collectible investments like stocks as collectibles, with any gains subject to tax at a maximum rate of 28% – this is significantly higher than the long-term capital gains tax of 15% for most other assets.
However, sales taxes on precious metals differ depending on your state, with some not levying any at all. There may also be storage taxes levied against precious metals. To reduce tax liability when selling precious metals, use their original purchase price as their cost basis when selling them – this will significantly reduce tax bills! To further decrease them further, add expenses like appraisal fees into their cost basis which are usually tax deductible as business expenses.
Taxes on sales
Gold coins and bars must meet specific reporting requirements when sold, with sales having to be reported to the IRS. Failure to do so could incur penalties and fines; any dealer that suggests bypassing taxes should be regarded with suspicion.
The IRS classifies gold and other precious metals as collectibles and taxes them at 28%; there may be exceptions to this rule for certain government-issued gold coins backed by US currency or bullion coins made of precious metals that may be exempted from sales tax payments.
Other exceptions include present sales for future delivery and credit transactions; however, these do not apply to sales of monetized bullion paper currency or numismatic coins which are subject to retailing B&O tax or wholesale B&O tax with a reseller permit.
Taxes on cash payments
Precious metal dealers must report all cash sales of physical gold coins and bars made to customers to the IRS as these sales could potentially constitute tax evasion activities, with which it aims to monitor. Dealers are required to fill out two forms – 1099-B for this transaction as well as 8300 for customer information – when reporting such sales, as part of its duties of identification by law.
The IRS considers profits from selling gold bullion as collectibles and tax them at an individual tax rate; their value can be calculated by subtracting its cost basis from total sales price. Certain forms of gold and silver bullion may not fall into this category, including legal tender coins in the United States and gold with specific fineness standards. Gold futures contracts do not constitute direct ownership, so these contracts don’t count as collectibles either, though their tax rate may be much higher than for an IRA account.
Taxes on dealers
As precious metals are considered collectibles, they are subject to a maximum tax rate of 28% – much higher than other investments like stocks. Investors can avoid this high cost by purchasing gold through exchange-traded funds (ETFs). ETFs offer numerous advantages including lower storage and shipping fees than direct ownership of physical metal.
Dealers selling gold from inheritance or gifts must also pay capital gains taxes in case of profits, wholesaling B&O taxes if coins cannot be used as currency and service and other activities B&O taxes on bullion paper currency sales.
Dealers receiving cash payments of $10,000 or more must report them to the IRS as required under US law; this enables the government to monitor large commodity exchanges within the country and prevent money laundering. Therefore, keeping accurate records of your gold transactions is vitally important.