Benefits Of Tax Free Gold Coins
Demand for tax free gold coins is much higher than most other types of gold. This means they are easily liquidated.
Because tax-free gold coins come in different sizes and denominations, customers have more flexibility when choosing to sell a specific amount of gold as opposed to having to sell more than they want to and be left with cash that they would otherwise want in physical gold.
In general, there are fewer issues with authenticity with coins than there are with gold bars.
Gold And Silver Stocks
Like all publicly listed stocks, gold companies issue shares that are available for investors to trade. When a person purchases shares of a gold firm, they are essentially purchasing a stake in the company, making returns or losses from its profits.
There are two main paths to take when purchasing shares of companies with gold mines. One way of obtaining shares is by purchasing them from major mining companies like Barrick Gold or Newmont . The other way is by investing in a junior miner. While both avenues have their pros and cons, its worth noting that investing in a junior gold stock can be inherently risky. These companies are more prone to failure due to the risks associated with exploration and development, so investors stand a greater chance at taking on a loss.
Finally, market participants can also obtain gold shares through investing in gold streaming and royalty companies, such as Wheaton Precious Metals .
Although no stock is 100 percent foolproof, investing in a more senior company can alleviate some of the stress of a down market considering that if a companys share price goes down, it becomes more affordable to purchase and investors can more than likely anticipate that it will rise again.
Silver stocks are purchased in the same manner and through the same channels as gold stocks, and therefore are taxed in the same way.
Gold Bullion Taxes In The Uk
In the United Kingdom, there are some frustrating laws regarding precious metals, and ones that put many investors off. Simply put, you need to pay a 20% VAT on silver, platinum and palladium, and even if you buy overseas, pay those hefty shipping charges and avoid taxes, they can still sting you. In this case, the items are checked as they arrive in the country and the recipient receives a note telling them that they need to pay an additional 20% on their order, as well as a fee imposed by the delivery service.
There are no such charges for gold bullion, but you will be forced to pay capital gains tax, which is what you pay on the profits that you make from the sale of bullion. Basically, if you buy gold for £1,000 and sell it for £1,200, regardless of when you sell it or whom you sell it to, you will need to pay a 28% tax on that £200. You can get around this by sticking to legal tender bullion, including coins like the Gold Britannia and Gold Sovereign, as well as other coins produced by the Royal Mint.
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Testing Gold Silver And Diamonds
There are two major things you need to know to purchase and sell gold and silver:
Typically, when people try to get started in the business of buying and selling gold, they run into two major problems.
First, they donât feel confident in their ability to test the gold, which leads to the second issue: they donât take any action.
Wallace identifies several methods to test gold and silver to determine their purity and ensure the items are genuine.
Gaining knowledge of these testing methods can boost your confidence in your ability to identify deals that will enable you to sell gold at a profit after you acquire it.
Next, letâs explore ways to test gold and silver.
Is It A Short Or Long
How long have you held the gold? The IRS will use your answer to judge how much tax to levy on your gold.
The IRS considers gold sales as part of capital assets under the collectibles category. Therefore, as long as you hold rare coinage, ingots, bullion bars, and coins you, will be subject to Capital Gain Tax.
However, the CGTs only apply if you have held the gold for more than a year.
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Owning Gold And Precious Metals Doesnt Have To Be Taxing
2020 was a tremendous year for precious metals investments. Gold bullion gained 25.12% in 2020. Silver bullion rose 47.89%. Palladium climbed 25.86% and platinum increased 10.92%.1 Tax time is here, and it is critically important for investors especially after a strong year like 2020 to understand the potential tax ramifications of owning physical precious metals.
For many U.S. investors the returns provided by owning physical gold and the other precious metals including silver, platinum and palladium come with a sobering surprise when the assets are sold and its time to pay taxes. The reason: The U.S. Internal Revenue Service categorizes gold and other precious metals as “collectibles” which are taxed at a 28% long-term capital gains rate. Gains on most other assets held for more than one year are subject to the 15% or 20% long-term capital gains rates.
metals
Gold Coin Sales Not Requiring A 1099
Gold coins that do not require the additional filing of a 1099 include:
- American Eagle Gold Coins
- American Gold Buffalo Coins
- Austrian Philharmonic Gold Coins
You do not have to file a 1099 with any quantity of the following silver bullion coins:
- American Silver Eagle Coins
- Canadian Maple Leaf Silver Coins
- Austrian Philharmonic Silver Coins
Because these gold coins and silver coins require less paperwork, they are often more popular among people who buy large quantities of gold bullion coins. Remember, filing the 1099 only applies to larger sales of these coins. The sale of a few Krugerrands in a single tax year will not require the additional form.
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How To Invest In Gold And Pay No Capital Gains Tax
Learning how to invest in gold will protect your retirement savings and help avoid unnecessary taxation to enjoy more of the money you worked so hard for.
Learning how to invest in gold will help make the most from your investments so youre able to enjoy your ideal retirement.
The ultimate goal when saving and investing for retirement is to come out on top financially. After all, how else do you plan on bringing in money when youre no longer working?
You want the money that youve invested to do its job of increasing in value but avoid paying penalties and taxes as much as humanly possible.
Learning how to invest in gold will help protect your investments from wild swings in the market while avoiding capital gains tax. If youre planning on buying gold with your retirement funds, there are things youll want to know so you can avoid unnecessary taxation and enjoy more of the money you earned while planning for retirement. That means greater security and less to lose by diversifying your investment portfolio.
What is Capital Gains Tax?
Capital gains tax is assessed after selling an asset such as stocks, bonds, jewelry, precious metals, and real estate. The price that the item sold for is subtracted from the original purchase price to come up with a taxable amount paid to the IRS. Whatever profit you made off the item upon receipt of sale is considered a capital gain.
How to Limit Your Capital Gains Tax by Learning How to Invest in Gold
Heres how we do it:
How The Form Of Gold Influences Your Tax Payments
Are you selling sovereign gold bonds, digital gold, jewelry, collectibles, or gold motor funds? When making your declarations in the Capital Gains and Losses Schedule D of the IRS, the type of metal you sell will determine which part you fill.
And, indeed, it will influence the amount of money you pay less tax for selling gold.
See some forms in which you can sell gold.
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How To Sell Gold And Silver Tax
You can trade an unlimited amount of gold and not pay the tax when using the self-directed Roth retirement account. Or, you can postpone the gold taxes with the 1031 IRS exchange. The Internal Revenue Service requires you to report any physical gold sales on Form 1099-B.
Do you have to file taxes on gold and silver?
- Gold and silver bars that are 1 kilogram or 1,000 troy ounces require the filing as well. American Gold Eagle coin sales do not require a Form 1099-B filing. 5 The tax bill for all of these sales is due at the same time that your ordinary income tax bill is due.
Gold Bullion Taxes In India
India is one of the biggest gold buying markets in the world, but it also imposes a country-wide tax on gold bullion. For gold that is imported, this is as high as 10%, and there are also taxes on gold used in jewellery, which increased in 2016.
Many believe that the Indian government wants to reduce the amount of money that its people spend on gold bullion and on gold in general, which is why these taxes have been increasing, and why they may continue to increase in the coming years.
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Physical Gold And Silver
Physical gold investors are generally looking for items that are considered fine gold . Several products fit this description, and one of the most preferred is gold bullion coins, such as the South African Krugerrand or the American Gold Eagle.
Another option is gold rounds, which are similar to coins, but are not legal tender. Both gold coins and gold rounds come in various sizes, usually ranging from 1/10 of an ounce to 1 ounce, though other less common sizes are available. Gold bars are another popular option for yellow metal exposure. They also come in a variety of sizes, ranging from 1 gram bars to 400 ounce bars.
When the objective is to get the most metal for the least money, its generally best to shop for gold rounds and gold bars, which tend to be cheaper than gold coins of the same weight. The premium for gold coins is higher because they are fabricated by government mints and have detailed designs.
Another factor to consider is the amount to be invested. Sizeable investments are best made in large gold bars. Further, it is often easier to manage large bullion bars than an array of smaller gold coins.
These principles also hold true when investing in physical silver purchasing silver products such as silver bars, silver coins and silver rounds are popular ways to invest in silver.
It is worth noting that the 28 percent maximum is applicable to long-term capital gains, since short-term capital gains on precious metals are taxed at ordinary income rates.
Cost Basis Of Physical Gold And Silver
The amount of tax owed on the sale of precious metals depends on the cost basis of the metals themselves. If you purchase the metals yourself, then the cost basis is equal to the amount paid for the metal. The IRS does allow you to add certain costs to the basis, which can reduce your tax liability in the future. Certain items, such as the cost of appraisals, can be added.
There are two special scenarios for calculating the cost basis of physical gold or silver. First, if you receive the metals as a gift, the cost basis is equal to the market value of the metals on the date that the gifter purchased them. If at the time of gifting the market value of the metals is less than what the person giving them to you paid, then the cost basis is equal to the market value on the day that you receive the gift. As for the second special scenario, if you inherit gold or silver, then the cost basis is equal to the market value on the date of death of the person from whom you inherited the metals.
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Precious Metals And Gst/hst
According to subsection 123 of the Excise Tax Act, a precious metal is part of the definition of Financial Instrument. This is important because Financial Instruments are not subject to GST/HST on their sale.
Precious Metals
Precious metals are bars, ingots, coins or wafers of gold and platinum that are refined to a purity level of 99.5%. Silver is also a precious metal if it is refined to a purity level of 99.9%.
If a precious metal that meets the definition of financial instrument are sold, there is no GST/HST charged.
Scrap Gold
An issue that the Canada Revenue Agency typically has with sellers of precious metals, is the sale of scrap gold. Scrap gold is not refined to a purity of at least 99.5% and thus GST/HST is chargeable on the sale. Where this gets complicated is through the following example:
- Lebron sells scrap gold to Steph
- Steph purchases more scrap gold and then sends it all to a refiner
- The refiner smelts down the gold and turns it into 99.5% pure and
- The refiner takes a fee for the service and then ships the 99.5% pure gold back to Steph.
The CRA occasionally takes the position that Steph sold the scrap gold to the refiner, and then purchases the pure gold. Why this matters is if that was indeed the case, Steph would have to charge GST/HST on the sale of the scrap gold to the refiner.
If you are being audited for the sale of precious metals, contact us today to see how we can help!
Case Law
Michaud v. The Queen, 2014 TCC 83 Gold Prospecting
Is Cgt Applicable To The Royal Mints Coins
Bullion coins from The Royal Mint are exempt from Capital Gains Tax for UK residents due to their status as legal British currency. In fact, all gold, silver and platinum bullion coins produced by The Royal Mint are classed as CGT-free investments this includes gold and silver Britannia coins, Sovereigns and the popular Queens Beasts range. Due to their CGT exemption, investors can make an unlimited tax-free profit on all bullion coins produced by The Royal Mint. This contrasts with the vast majority of other investments and assets, including paintings, antiques, most shares and any property other than someones main residence, where the profits on the sale are liable for CGT.
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How To Sell Gold Without Paying Taxes
Easy.
Its certainly a smart ass answer.
But its the general truth at the moment.
Physical bullion IRA tax exceptions aside. In general, if a US citizen sells bullion for more than they bought it for, the IRS will want its cut of the profits.
Render to the IRS, that which is the IRS.
What was the cost basis on the bullion you sold?
If your cost basis was lower than what you sold your bullion for, a portion of the profit goes to the IRS.
EXAMPLE: I bought this silver in 2008 for $12 oz. I just sold it for $15 oz. The IRS is going to want its cut of the $3 profit.
Same holds true for any precious metal and or other collectible. And yes paper bugs, same rules apply even in some annual fee charging surreal ETF proxy, not just bullion alone.
Now dumbed down misinformation abounds online, so chances are high you have seen people generalize things. Often claiming bullion is taxed at a 28% rate. Although they often forget to attach the word maximum to that claim.
Currently you have to be making over $155k a year as a single tax filer, or over $300k year filed jointly, to be taxed that highly on your bullion profits.
Median US citizens makes about $60k per year, so average people selling bullion for a profit will likely be in a federal tax bracket lower than 28%.
Gold Reporting To The Irs
You can find a handy Gold Reporting InfoGraphic below illustrating IRS reporting matters.
The main two topics covered are:
which payment methods / quantities remain private when buying your bullion from US based bullion dealers.
which bullion products and what quantity sizes are reported to the IRS via their 1099-B form when sold back to US based bullion dealers.
Learn why many of these current payment and bullion reporting rules exist .
Of course this topic mainly deals with private bullion transactions, private US citizen to US based bullion dealer and vice versa.
There are some exceptions on the tax and reporting side, if you are using a Bullion IRA.
If you reside outside the USA, often many similar AML statues will pertain to you too. As for bullion taxes in your local jurisdiction, consult your foreign tax pro.
Below is an illustration and infographic on US based bullion dealer IRS reporting rules according to our knowledge today.
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Payment Reporting When Buying Bullion Online
If you have bought bullion online, it is likely you have noticed various payment policies which deter customers from using large amounts of cash or cash equivalents in payment . The IRS requires businesses to file Form 8300 when large cash payments are involved.
There have been various now bankrupt, poor track record bullion dealers in the past who have got themselves into hot water by allegedly laundering drug dealer cash through bullion purchases. Even some established bullion mints have been accused in the past as well as also as recently as this year , for not having appropriate anti-money laundering policies in place.
Often law-abiding bullion dealers in the USA resort to only receiving cash equivalent payments in small quantities, if any at all. Typically online bullion dealers lean on established financial institutions as the first layer in their Anti-Money Laundering and Know Your Customer compliance policies.
Typical online bullion dealer payment methods like personal bank checks, bank wire transfers, ACH, credit / debit cards, PayPal, etc. are exempt from IRS Form 8300 filings by bullion dealers as these payment methods are coming through financial institutions which should have already executed legally required KYC and AML due diligence on their respective customers.
