Does the IRS Know When You Buy Gold?
Many individuals seek to buy and sell gold anonymously due to concerns regarding privacy or identity theft.
No matter the reason for keeping transactions private, the IRS wants to know when you make a profit from precious metal investments and sell them at a profit – these sales may be subject to capital gains tax.
What’s the IRS’s role?
When purchasing physical gold and other precious metals, the Internal Revenue Service considers them “collectibles.” Any gains realized on them held over one year are taxed at 28% collector’s rates.
Dealers must report any sale of precious metals over $10,000 that exceeds cash payments in order to detect possible money laundering or fraud and protect consumers.
Precious metal dealers must file form 1099-B with the IRS to report proceeds paid out to non-corporate sellers of precious metals and bullion coins, in order to assist with tracking whether individuals are properly reporting profits on their income tax returns.
Many individuals do not like the idea of their gold transactions being reported to the government, feeling as if it invades their privacy or not worth having to file taxes on. Luckily, many dealers offer anonymous transactions so their clients can still purchase precious metals.
What’s the agency’s role?
When someone purchases cash gold that falls on the IRS Reportable Items List and their dealer must file Form 8300, their identity and address become known to the agency. This enables the IRS to ensure they meet anti-money laundering guidelines as well as reporting requirements.
Physical gold investments are considered collectibles and subject to a maximum capital gains tax rate of 28%. You can minimize taxes by opting for lower-priced options like bullion bars or rounds priced solely according to their gold weight.
The IRS mandates meticulous records keeping for any IRA gold purchases or sales, including types of metal purchased, dates of sales transactions and amounts received in proceeds. Digital record keeping can make record keeping more efficient while offering easier access.
What’s the agency’s history?
As stated by Bullion Exchanges, when making a profit by selling gold coins for more than you purchased them for, the IRS requires you to report and pay taxes on that capital gain. That is because precious metals are considered investment assets rather than personal property – meaning you could sell them at more than what they originally cost you.
Federal laws mandating dealers to report certain sales of rare coins and bullion were introduced in the 1980s as a means of monitoring large commodity exchanges within the US and also to detect possible money laundering schemes.
Many individuals prefer keeping their precious metal purchases private, fearing the IRS may report them or that transaction details could be shared by unscrupulous dealers. Because of this, some prefer purchasing and selling direct with one another–this can be accomplished through online auctions or visiting an established coin and bullion dealer in person.
What’s the agency’s role today?
Though the IRS doesn’t specifically tax precious metals, collectors are expected to accurately report any profits earned when selling them. Depending on the length of time you held onto coins before selling and your tax filing status, capital gains taxes may apply when selling coins for profit.
Investors can avoid this higher tax rate by investing in funds and ETFs that don’t purchase physical gold, which will be subject to tax at the same maximum capital gains rate (28% for high earners) as other financial assets such as stocks or mutual funds.
Federal law also mandates that dealers must report any cash payments received for purchases of $10K or more from customers. This policy was developed by the National Treasury in the 80s as a means to monitor commodity exchanges within the US and avoid money laundering schemes that could harm our economy. Unfortunately, some dishonest coin dealers and customers attempt to bypass these regulations by dispersing payments over several days so as to not meet reporting threshold.
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