How Do I Report the Sale of Gold on My Tax Return?
If you own gold coins, the IRS requires them to be reported on your tax return; however, there may be exceptions that reduce this obligation.
Precious metals such as gold and silver are considered capital assets, which means any financial gain from selling these assets constitutes taxable income and must be reported to the IRS.
Taxes on Gains
Gold has become a highly desirable investment vehicle among those who seek to protect themselves against inflation, geopolitical risks and an imminent recession. When investors sell precious metal investments they must report this sale on their tax return; any taxes due depend upon how long the investor held onto their holdings and their income level.
Profits made on the sale of gold coins are considered capital gains and must be taxed as income. To determine your gain, first calculate your basis in them – usually the price at which they were originally purchased but this could also include shipping and sales tax expenses incurred as well.
Depending on the type of gold you sell, depending on its composition you may need to file Form 1099-B with the IRS as part of reporting duties for non-corporate sellers of precious metals and to help prevent tax evasion cases. This form serves as an essential way of mitigating tax evasion attempts by taxpayers and aiding in tax auditing efforts by helping detect any cases of tax evasion that occur.
Taxes on Losses
When purchasing precious metals at prices lower than their fair market value (FMV), no taxes need to be paid on any differences in cost; however, when selling coins for more than their FMV prices they will be subject to capital gains taxation.
It differs from ordinary income, which refers to money you make from working. Since gold investments are considered investments by the IRS, any gains realized upon selling your bullion will be taxed at 28%.
Due to these facts, all sales of physical gold and silver should be reported on a tax return. Your transaction should be included on Schedule D of Form 1040 and you’ll need to determine your basis and any gain or loss. For best results, speak to a financial advisor regarding how this process applies specifically to you.
Taxes on International Sales
Precious metals are generally classified as capital assets and any financial gains from their sale are treated as taxable income by the IRS. There may be special circumstances under which investors can roll their profits into another investment without incurring taxes; but such opportunities must be availed of.
Most dealers are legally bound to report transactions involving customers who sell large quantities of specific bullion pieces or pay $10,000 or more in cash; payments must be made using traveler’s checks, cashier’s checks or money orders and not credit cards, ACH transfers or other electronic payment methods considered cash payments. This reporting serves to prevent money laundering or any illegal activities.
There are a few exceptions when reporting the sale of gold on a tax return. If a customer acquired coins as part of a hobby or ordinary transaction in their business, any gains or losses must be reported as other income on Schedule D of Form 1040; or, if sold as collectibles on Form 8949.
Taxes on Coins
Reporting gold sales on your tax return is mandatory and any profit made from selling precious metals (including coins ) must be reported and taxed at the same rate as other income earned during the year.
Customers selling gold or silver may need to provide the IRS with 1099B forms after selling bullion that meets certain quantity thresholds.
However, most gold coin sales do not fall under reporting requirements to the IRS on Form 1099B; only certain silver coin and pre-1965 US gold coin transactions triggered IRS 1099B reporting obligations for dealers. All other coin and bullion product sales remain exempt; this includes sales to US based dealers of government minted.999 palladium bullion coins.