Are Gold Coins Taxable?
When selling precious metal investments like gold coins or bullion bars, the IRS wants their cut. They consider this income taxable at up to 28% for collectibles; dealers may need to submit Form 1099-B in certain situations.
Gifted or inherited precious metals must be reported either as long-term capital gains or short-term capital gains, depending on how long you held onto them for.
Taxes on gold
As investors consider gold coins for their portfolios, it’s essential that they understand all of the taxes involved. Although precious metal dealers and storage fees are costs associated with owning physical gold, the IRS charges capital gains tax when any profits from selling your coins. This rate differs from that charged under regular income taxes and depends on how long your precious metals were held before being sold off.
The IRS considers gold and other precious metals to be collectibles, similar to paintings or rare stamps. Any profits you make on them will be taxed at a maximum rate of 28%; most other investments are taxed at either 15% or 20% respectively. If you hold your coins for longer than one year, however, they qualify for long-term capital gains tax rates which will reduce taxes further.
Are You Collecting Precious Metals? It is wise to keep records of purchases and sales of precious metals for tax reporting purposes, in order to be more accurate when filing with the IRS and avoid any possible penalties or interest charges. Whenever possible, seek professional guidance such as consulting a tax specialist or certified public accountant to make sure all applicable rules and regulations are being abided by.
Most states do not charge sales tax on gold and silver bullion purchases, however some may impose a taxable percentage on rare coins and other valuable items with more value than just their precious metal content. It is therefore essential to check city, county and state sales tax rates prior to making any purchase decisions.
Typically, any precious metals sold at more than their face value (numismatic coins or paper currency) are subject to wholesaling and retailing business and occupation (B&O) tax and retail sales tax; however, any bullion sold for more than its face value may be exempt from these taxes if sold in bulk sales transactions.
Taxes on silver
Tax laws could play a part in how much of your profits you keep if your portfolio includes physical precious metal coins and bars, according to tax laws. Dealers are required to report transactions involving more than $11,000 worth of gold or silver as this serves to monitor large-scale commodity exchanges and prevent money laundering. It would be advisable for those heavily investing in physical precious metal coins or bars to speak with an advisor familiar with this investment type in order to gain a fuller understanding of their reporting obligations and taxes associated with precious metal investments.
Certain forms of silver sold for profit require you to pay sales taxes when sold, such as dimes or coins that are 90 percent pure in face value or greater. When selling these for a profit, however, sales must be reported and any applicable sales taxes paid. Bars that weigh at least 10 troy ounces do not need to be reported separately.
Sales taxes also apply to specific forms of silver bullion and coins issued by governments with face values as well as gold bullion that has an acceptable fineness rating of at least 1 ounce; to learn more, contact your state tax bureau.
Before liquidating an inherited or gifted coin collection, it’s essential to carefully consider its tax implications. The IRS treats coins differently from stocks and other investments; when assessing taxes for coin collections, the first step should be calculating your cost basis; this will enable you to ascertain your total profit upon selling and then calculate your tax rate by income bracket (with 28% being the current top tax rate). Depending on your circumstances, holding precious metals within an IRA could reduce tax burden significantly.