Can You Claim Gold on Your Taxes?
Gold can be an attractive investment option, but before making any purchases it’s essential to understand its tax repercussions. Reporting precious metal purchases requires reporting to the Internal Revenue Service who has established guidelines regarding what transactions must be reported to them.
Gains on gold are taxed like any other capital gain, though there may be ways to limit their tax impact. A 1031 exchange offers one such strategy for moving profits without incurring capital gains taxes.
Taxes on Capital Gains
If you make a profit from selling assets such as gold or other investment properties, such as stocks or bonds, they should be claimed on your income taxes as capital gains. How much you owe will depend upon how long the assets were held as well as your tax bracket.
Calculating capital gains involves finding out your asset’s basis – including commissions and fees – compared with its sales price when sold, then subtracting this figure from this sum; your profit is the difference.
Long-term capital gains tend to be taxed at a lower rate than ordinary income, while short-term gains are taxed similarly. Certain taxpayers may owe an additional net investment income tax of 3.8% on any taxable gains that surpass certain thresholds – for more details see IRS Publication 544. In addition, collectible assets like coins, precious metals and valuable artwork may incur up to 28% capital gains tax rates on their gains.
Taxes on Dealers
One of the oldest rules in tax planning is deferring income and accelerating deductions, so when tax rates are expected to increase this strategy becomes even more essential. Dealerships (typically flow-through entities) should consider grouping assets with short lifespans together in years with anticipated higher tax rates to get greater depreciation deductions; additionally they should explore strategies for lifetime gifting to ensure maximum estate tax exemption.
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