There are a number of factors that make gold an attractive investment opportunity. Given the state of the economy and the much more modest return from the stock market (compared to the gold market,) more and more people are turning to gold.
And why not? Physical gold is backed by a tangible commodity that enjoys worldwide demand, and even if the market takes a nosedive, it’s very unlikely that an investor will lose the entire amount held in a gold investment. This scenario is much more likely when investing in the stock market.
Basics of Selling Gold
There’s nothing quite like the feeling of seeing the payout from a good investment. Whether you’re looking to buy your first ingot or have been investing in gold for years, one day, hopefully while the spot price is at a record high, you’ll sell your bullion and see a tidy profit. When that day comes you’ll need to know some basics about how to sell your gold. Let’s take a look at a few important points.
Assuming you’re a United States Citizen, the IRS (Internal Revenue Service) will be very interested whenever you sell a sizable amount of gold. Income in the US is taxed federally, regardless of what type of income it is; for money made from selling precious metals you’ll more than likely be recording this sale on a specific form: Form 1099-B.
When to Report
The 1099-B form is used to report income from sources other than wages, salaries and tips. Keep in mind that you may or may not have to use the 1099-B, depending on how you decide to do your taxes. As with everything else to do with the IRS, it gets more complicated.
Not all bullion sales need to be reported on the 1099-B and the rules for which bullion is exempt are somewhat convoluted and vague. It’s always a good idea to have a tax professional look over any part of your return that you have questions about.
Here are the basic rules that govern sales of gold and other precious metals.
- Generally, bullion minted by national mints do not have to be reported, no matter how much you sell. This includes popular bullion coins such as the American Gold and Silver Eagles, American Gold Buffaloes and Gold and Silver Austrian Philharmonics, along with their smaller sizes (called fractionals).
- Sales of bullion minted by private mints generally do have to be reported. This includes popular gold bars made by mints such as Credit Suisse, the Perth Mint and Engelhard. Different types of metal must be reported after certain amounts. Gold transactions over 25 ounces must be reported, whereas for silver, it’s 1,000 ounces.
- Certain coins that are minted by national government count towards the transaction limit, including Mexican Onzas, Gold Canadian Maple Leafs, and Gold South African Krugerrands.
- Some states charge sales tax on gold, silver, palladium and platinum, but percentages vary. Some states don’t charge any sales tax as long as precious metals are purchased for ‘investment,’ which usually means you spend over a certain amount, such as $5,000 or $10,000. Check your local regulations to be sure.
Investing in the gold market is a sound diversification strategy. Knowing the reporting requirements will allow you to make more informed decisions and keep your documentation in order. When you sell gold and make a profit, you will know exactly what your responsibilities are, allowing you to sidestep costly fees or even audits.