How may gold be sold without incurring taxes? This is a great question that we frequently receive at Gold Galore Jewelers. The IRS does a good job, but it only makes sense that you would want to sell your gold for as much money as possible without losing any money.
One of the best, safest, and most lucrative investments you can make is gold. Contrarily, the tax regulations pertaining to precious metals like gold and silver can become quite complex. The intricacy increases when you take into account all of the different methods you can buy or sell gold (as jewelry, bullion, coins, gold bars, etc.).
We’ll attempt to address some of the often asked questions in this post about the tax implications of selling gold, including:
Should I pay taxes if I sell my gold?
How can I avoid paying gold capital gains tax?
Do the IRS receive reports on gold transactions?
What amount of gold can I sell without disclosing it?
To be clear, we are not offering tax advice here; rather, we are simply disseminating some general facts.
Although we make every effort to be accurate, we cannot guarantee that the information in this article is complete, up-to-date, or applies to every single case (because laws change). In order to prevent problems with the IRS, always consult a CPA and/or an attorney if there is anything ambiguous about your taxes.
Does Gold Fail Taxes?
Yes. The IRS classifies gold as a collection, just like fine art or antiques, and taxes it accordingly.
Investment-grade gold is referred to here, such as:
commemorative gold coins
round and flat gold forms
Any and all bullion coin denominations
gold numismatic wafers, bars, and coins
Think of the IRS like an art collector when it comes to selling your gold. Your artwork’s tax worth will increase as it becomes more rare and valuable—this rule also applies to precious metals!
In other words, rather than only measuring how much gold was used to make the coin, the overall worth of the coin is what is taxed.
Should I pay taxes if I sell my gold?
Generally speaking, if you benefit from the sale of gold, you must pay tax. Precious metals like gold and silver are regarded as capital assets by the IRS, and any profit from their sale is treated as taxable income.
Gold jewelry sales proceeds are categorized in this way because they are handled similarly to other valuable personal property and are readily exchangeable for cash. As a result, you will be required to pay tax on the capital gain from the sale of your gold.
A rise in the value of your gold item is referred to in this context as a capital gain. The realization of a capital gain, whether it be short-term (lasting less than a year) or long-term (lasting more than a year), normally occurs when the property is sold, at which point it must be reported on your income tax.
How to determine how much tax you must pay when selling gold
Subtract the original purchase cost from the fair market value (FMV) of the item to determine its current value. Any gain or loss in value from the time of purchase to the date of sale will be taken into account and added to the starting point, regardless of whether it came from a gift, inheritance, or another source.
Here is an example:
Suppose, for instance, that you purchased a gold necklace for $100 and later sold it for $200. If capital gains were $100, the total amount of capital gains taxes due would be $28.
The fair market value of any gold jewelry you inherit or get as a gift, on the other hand, becomes your cost basis. For instance, if someone gives you three rings and two necklaces that were worth $2,000 at the time they were given to you, but were sold for less than that amount, you would not receive any money from the sale. As a result, you are not required to pay tax on this transaction.
Do the IRS receive reports on gold transactions?
In general, you must inform the IRS of your gold transactions. But when precious metals like gold and silver are sold, there may be tax obligations that are not immediately due. Instead, Schedule D of Form 1040 must contain a record of any sales of actual gold or silver.
Most persons report capital gains and losses that occur from the sale or trade of certain property during the year on the Schedule D form, specifically. Stocks, bonds, real estate investment trusts (REITs), and collectibles like gold are examples of this.
Additionally, it depends on the type and quantity of gold you’re selling.
A Form 1099-B must be filed at the time of sale if you sell more than $1,000 worth of gold or silver coins in a single year.
U.S. 90% Silver Dimes ($1000 face value) and more than 25 pieces of one-ounce Gold Maple Leaf, Gold Krugerrand, and Gold Mexican Onza coins are among the items that need to be filed. This includes any gold or silver item that contains greater than 50% pure gold or silver, as well as coins and bars weighing 1 kilogram or 1000 troy ounces, respectively.
People who have sold a metal-containing asset worth more than $1,000 must complete Form 1099-B. According to tax legislation, the person selling such assets must file said document within 30 days after the sale.
