Can the IRS Take My Gold?
Many individuals invest in gold as part of their retirement portfolios, yet may be unaware that the IRS imposes stringent rules regarding its storage within an IRA account.
The Internal Revenue Service classifies gold coins as collectibles and taxes them at a higher 28% rate compared to ordinary long-term capital gains rates for most other assets. There are ways around these taxes though; such as careful overall tax planning.
Taxes on Capital Gains
Capital gains result from selling assets such as stocks, real estate or collectibles for more than they were initially purchased for, which are taxed differently than ordinary income. Your federal tax rate on short- and long-term capital gains depends on factors like how long it was held before selling and whether any exemptions or deductions apply.
Capital gains on the sale of personal residences up to $250,000 ($500,000 if filing jointly) are exempt from taxable income; additionally, certain people can deduct 100 percent of any gains from qualified small business stock sales.
Calculating capital gains involves finding your basis in an asset and subtracting out any commissions or fees paid, then multiplying that figure by its sale price to arrive at your realized capital gain. Some states and localities also levy taxes on capital gains – the amount due should be reported on your federal tax return.
Selling to a Dealer
When selling precious metals investment assets for a profit, the IRS taxes your capital gains. This applies equally to any gold coins inherited as inheritance that are valued based on their fair market value at time of original owner’s death; this value is known as their cost basis. Gains on most assets held for over one year will likely be taxed at ordinary long-term capital gains rates of 15%-20% depending on income and filing status.
Some dealers report all purchases of gold bullion to the IRS; others only report transactions over $10,000. Either way, customers must file Form 8300 for cash transactions of this amount.
There are certain pieces of bullion which do not need to be reported, including gold American Eagle coins and any US currency created post-1980’s IRS List of Reportable Items publication. Speak with your dealer regarding local policies regarding reporting for more details; these policies can differ depending on where it was sold.
Selling Anonymously
Individuals seeking to sell gold anonymously often do so for various reasons, including to limit identity theft risk or avoid having their transactions reported to the IRS by dealers and pawn shops. Instead, they can sell it directly to individuals for cash – however this method of sale requires additional steps than simply walking into a jewelry store or pawn shop: appraisal may be needed prior to buying private buyers can require appraisal process that may take time as well as careful research in finding someone trustworthy who offers quality products.
Even with all of these safeguards in place, sellers may still be reported to the IRS. Dealers and brokers are required to report sales of items listed by the IRS as reportable items.
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