How Much Gold Can You Buy Without Reporting It to the IRS?
If you are considering investing in gold coins, it is essential that you understand their tax implications. This article will answer questions such as “How much gold can you purchase without reporting it to the IRS?” and provide insight into “Will my purchase trigger any reporting requirements”.
The IRS taxes precious metals like gold and silver as collectibles similar to art and antiques. When selling gold, capital gains tax may apply on any profits realized from sale.
1. There is no limit to how much gold you can buy
Fears that individuals would hoard gold to bring down a US economy which then operated on a gold standard were among the main drivers behind 1933’s law restricting private ownership of gold bullion, although that doesn’t prevent anyone from purchasing any amount of precious metals with cash or cash equivalent. There are however reporting laws which must be observed if large sums of cash or cash equivalent are spent to buy such precious metals.
These regulations, commonly referred to as “cash reporting”, stipulate that any transaction in excess of $10,000 where cash or its equivalent was exchanged must be reported to the government. As a result, many online bullion dealers and local coin shops avoid accepting payments made in large sums by cash, either physically or through other cash equivalents, in order to maintain customer privacy and avoid potential violations of these reporting rules.
Taxes that must be paid upon the sale of gold and other precious metals depend on both product type and long-term capital gains rates, with collector’s items such as coins that are sold for profit being taxed at 28% collector’s rates while an investment into physical precious metals ETF may only incur 20% long-term capital gains rates.
2. You don’t have to report your gold purchases
Although the IRS requires precious metals dealers to report purchases over $10,000, there may be instances in which you don’t need to. For example, purchasing gold coins minted by the US government with face values under $10,000 does not need to be reported and similarly for purchases using cashier’s checks with amounts that do not surpass this threshold.
Investors may be delighted to know they don’t need to report their gold purchases, yet all sales are subject to capital gains tax as the IRS considers physical precious metals collectibles with long-term capital gains tax rates of 28%. Therefore, before making any significant purchases it is wise to consult a financial advisor in order to understand your tax liabilities and reduce them through strategic overall investment planning.
3. You don’t have to report your gold sales
Though precious metals are considered capital assets and the profits from their sale constitute taxable income, you can delay paying taxes when investing through an IRA, SEP-IRA or 401K plan. However, certain criteria must be fulfilled to prevent an unexpected tax bill upon selling gold.
Example: If your gold sale was paid for with cash and totaled more than $10,000, reporting is mandatory. Cashier’s checks do not count as “real money”, though.
Additionally, dealers of gold bullion bars or coins must report sales made to customers exceeding certain quantities on a 1099B form to the IRS. American Gold Eagles or gold coins smaller than one ounce do not need to be reported in any form while Roth accounts do not require reporting requirements for sales made via these means.
4. You don’t have to report your gold gains
Some individuals seek to sell gold anonymously for various reasons. They could be concerned about privacy or identity theft risks. Or they may wish to keep their transactions under wraps from banks and governments alike. Whatever their motivation may be, purchasing and selling gold without incurring IRS reporting requirements is usually possible; with exceptions occurring when actual cash (such as money orders, traveler’s checks or bank wires) purchases exceed $10,000.
Government entities require reporting requirements on large cash payments in order to detect money laundering activities, but most other gold purchases don’t fall under reporting requirements. If you are uncertain whether your gold purchases will fall under reporting obligations, consult an experienced coin appraiser or precious metals dealer and consult your tax planner – intelligent tax planning can reduce capital gains tax liabilities on gold purchases.