How Do I Claim Gold on My Taxes?
Precious metals like gold coins and bars have become increasingly popular as inflation hedges. But buyers must understand how their investments are taxed before investing.
Gold investment profits in the US are subject to an unusually high 28% capital gains tax rate compared to traditional assets like stocks or bonds.
There is no limit on how much gold you can buy without reporting it to the IRS.
There is no legal limit to how much gold an individual may own without reporting it to the IRS, though it would generally not be prudent for an investor to keep large quantities in his/her possession as there exists the risk of theft or loss that can significantly alter an investor’s portfolio.
Investors typically keep precious metals stored in a safe deposit box at their bank or storage facility, providing easy access to their investments while verifying ownership of gold.
Gold and silver bullion investments such as mutual funds or ETFs that invest directly in physical gold may also be purchased, with any gains taxed at the same rate as long-term capital gains on other types of assets; however, investors should keep in mind that gains may not be as substantial.
Capital gains taxes apply to all sales of precious metals.
Precious metals such as gold bullion bars and coins are considered collectibles by the IRS, meaning any profits earned when selling them are subject to capital gains taxes. The amount due will depend on their sales price versus original cost basis – including purchase price as well as any costs related to storage or maintenance, appraisals fees etc. If sold profitably any profit made will be taxed at a maximum rate of 28% as opposed to 15% long-term capital gains tax rate applicable to other investments products.
Any cash payments received from non-corporate sellers of physical precious metals must be reported to the IRS on Form 1099-B in order for the government to monitor large transactions and prevent money laundering. This law applies both online and offline purchases of precious metals.
Losses on other collectibles can be used to offset a tax liability.
The IRS assesses profits made from selling precious metals at rates similar to other investments; however, your exact tax rates depend on how long you have held them; generally speaking if your precious metal investments have been held over one year then this will reduce capital gains tax rates significantly and shift them closer towards long-term income tax rates.
Other than physical gold and silver coins, investors can also access gold through ETFs. ETFs come in two main varieties – grantor trusts or closed-end funds; those structured as grantor trusts will be taxed as collectibles while those structured otherwise will be treated like securities for taxation purposes.
Calculating your cost basis requires keeping in mind that the value of coins and bullion when purchased serves as your starting point, with invoices or receipts as proof.
The IRS considers gold a collectible.
As gold and other precious metals are considered collectibles by the IRS, any profits gained on them will be taxed at a maximum rate of 28%. This applies to any physical gold or silver sold for profit including bullion jewelry and coins – however these taxes won’t immediately accrue upon sale of your precious metals.
The IRS requires that you report your gold sales on your annual tax filings, providing information such as cost basis for any pieces sold and capital gains calculations using this information.
As investors of gold can be subject to taxes when selling, there are ways you can minimize them when investing. Though no one is exempt from paying some amount in taxes when selling gold, careful and strategic planning may help lower your taxable liability and should always be discussed with a tax professional before making decisions regarding your gold investment.