Keep your investments for at least a year. These are taxed at normal income, which means that your profits are not eligible for the special, lower capital gains tax brackets. To avoid this, sell your investments after at least one year if possible. Otherwise, you could expect higher income tax rates. If you bought gold as an investment and made a profit selling it, the IRS wants a piece of the pie.
How much you owe depends on how long you held your precious metal investment. If you sell your metals within a year of purchase, the gains are simply taxed like normal income. In other words, it’s taxed at the rate of your income tax bracket. If you hold your metals for a year or more before selling them, the tax rate is capped at 28%.
Other payment methods that are exempt from reporting include personal checks, bank transfers, payment apps such as CashApp, Venmo, Zelle, and ACH transfers. Whether or not you have to pay sales tax when buying precious metals depends on where you are. Some states require sales tax collection, others don’t. Some states may also levy sales tax up to a certain point, and there may also be exceptions.
At the heart of the matter is whether gold, silver and precious metals should be considered an investment or even a currency, or whether they are simply like any other physical property such as clothing, cars, or furniture. Physical stocks of precious metals such as gold, silver, platinum, palladium, and titanium are considered by the Internal Revenue Service (IRS) as fixed assets that are specifically classified as collectibles. Additionally, by reporting these significant cash payments, the IRS can prevent potential money laundering schemes. This means that people in the 33%, 35% and 39.6% tax brackets only have to pay 28% for their physical precious metal sales.
As you probably know, things aren’t always black and white with the IRS, which is why it’s important to check with your tax advisor. As most good accountants will tell you, investment decisions should never be made solely based on tax considerations. However, if she sold her gold after owning it for more than a year (a long-term gain), she would owe less tax and take home a higher profit, as long-term capital gains are generally taxed at a lower rate than short-term capital gains. Most of us aren’t CPAs or tax advisors, but Atlanta Gold and Coin Buyers are happy to answer any questions you may have.
The Internal Revenue Service classifies precious metals such as gold as collectibles, similar to art or antiques. It’s important for gold investors to be aware of the tax consequences so they can make informed decisions about when to secure their profits. In terms of precious metals, capital gains occur when a particular coin or piece of precious metal increases in value and is then sold at that higher price. Many investors prefer to own physical gold and silver rather than exchange traded funds (ETFs) that invest in these precious metals.
For example, we found a few websites that claim the sale of American Silver Eagles is exempt from capital gains tax, which is based on an obscure law. Stocks of these metals, regardless of their shape, such as investment coins, precious bars, rare coins or bars, are subject to capital gains tax. It is important for investors who want to buy gold to know the tax implications of investing in the precious metal. In summary, precious metal transactions can be confusing enough without considering the information required by the IRS.