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Silver, Gold and Taxes (in the United States)

Please note, tax laws are very complex, and change frequently. Therefore, this information may be inaccurate or outdated (but to the best of our knowledge is not).

Also see our Truth About the 28% Tax page. In the United States, the tax you pay may be a lot less than you expect, and rarely 28%.

When Buying Silver or Gold

In the United States, there is no GST, VAT, national tax or the like. The only tax that you might pay is state sales tax, depending on which state you live in. In states with sales tax that covers bullion, purchases over a certain amount are normally exempt (just check with your local dealer to find out). If you live in a state with sales tax, and order online from an out-of-state company, the company will likely not charge you sales tax (but you will likely be expected to pay 'use tax' to your state).

When buying silver or gold, you need to keep track of what you bought and when (so that you can report the capital gains or loss, as mentioned later).

When Selling Silver or Gold

When selling, you will pay federal tax if you receive more than you original paid. As of this writing, gold, silver, and platinum bullion (and any type of coins) are treated as collectibles. That means that gains (your "profit") are usually treated as income, and but if it is a long-term gain the maximum rate would be 28% (it gets reported on the 1040 Schedule D).

The price that you original paid (including any commissions, fees, etc.) is normally your 'basis', which is used to determine if you made a gain or a loss. If you sell for more than that, you pay the 28% capital gains rate (however, if you would have a lower tax rate if the capital gains were treated as income, that lower rate will apply). Also, if the gain is short-term (you bought it less than 1 year before selling it), you are taxed at your normal income tax rate.

Note that you may need to file estimated taxes after you sell bullion. This is typically the case if you end up owing the IRS at least $1,000 after withholdings are accounted for.

Sales Tax

Some states require that you pay sales tax on bullion purchases, often only under a certain amount (e.g. purchases under $500).

We were going to research which states collect sales tax on bullion, but The Coinologist already did. Thank you!

Summary of states that do collect sales tax on bullion: Alabama, Arkansas, Washington DC, Hawaii, Indiana, Kansas, Kentucky, Maine, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Tennessee, Vermont, Virginia, West Virginia, Wisconsin, Wyoming.

Summary of states that do not collect sales tax on bullion: Arizona, Delaware, Georgia, Idaho, Illinois, Iowa, Michigan, Mississippi, Missouri, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Washington

Summary of states that do collect sales tax on bullion, but have exemptions over a certain amount: California ($1,500), Connecticut ($1,000), Florida ($500), Louisiana ($1,000), Maryland ($1,000), Massachusetts ($1,000), New York ($1,000), Texas ($1,000).

Summary of states that vary based on city or county (no state tax): Alaska, Montana, Colorado.

ArizonaNot taxed42-5061(A)(21) 
CaliforniaTaxed up to $1,500South African coins are always taxed (e.g. Krugerrands). California Gold medallions are not taxed. Regulation 1599.
ConnecticutTaxed up to $1,000Conn. Gen. Stat. 12-412(45).
FloridaTaxed under $500212.08 (7)(ww)
GeorgiaNot taxedTitle 48, Section 48-8-3 (66)
IdahoNot taxedTitle 63 Chapter 36 (63-3622V)
IndianaTaxedInformation Bulletin #50, December 2002.
KansasTaxed.Regulation Number 92-19-56
LouisianaTaxed up to $1,000RS 47:301 Chapter 2 Section 301 (16)(b)(ii)
MassachusettsTaxed up to $1,000 Chapter 64H Section 6 (ll)
MissouriNot Taxed.Chapter 144 Section 144.815
New YorkTaxed up to $1,000Section 1115(a)(27)
North DakotaNot taxed57-39.2-04.31
OklahomaTaxed710:65-13-95 exempts bullion stored at a recognized depository.
Rhode IslandNot taxedTitle 44, Chapters 18-19,
South CarolinaNot taxedSection 12-36-2120 (70)(a)
South DakotaNot taxed10-45-110
TennesseeTaxedAttorney General Opinion #12-110, December 2012.
WashingtonNot TaxedWAC 458-20-248
WisconsinTaxedTax 11.78 (1)(g)

Tax Fraud

Many people in forums state that they do not or will not pay tax when selling their silver or gold.

Worse, many people also go to great lengths to not "leave a paper trail" -- in other words, they don't get receipts for their purchases (presuambly because they expect not to pay taxes later). Once, I made a trade with a well known bullion dealer at a coin show; while I was waiting, I saw him make a trade with another dealer and print a receipt. But for my trade, he was not expecting to give me a receipt. It was clear that customers more often than not do not want paperwork.

However, you should think carefully before doing this. Tax fraud can have serious consequences: [1] In rare cases, you could go to jail; [2] the penalties for tax fraud are higher than for negligence; [3] the normal 3-year statute of limitations goes away (normally, 3 years after a return is filed, the IRS cannot change it).

So if you hide gains from silver sales for decades, and one of your recent returns gets audited, you could end up owing an astronomical amount. Normally, the IRS can only look at returns for 3 years. But if they discover fraud, they can go back as far as the fraud does. So you may end up owing taxes, penalties, and interest on all the gains for all the years.

For those that think they will not get caught, one of the standard questions that auditors ask during an audit is whether or not you keep money in a hidden location (such as a safe) [see here]. No matter what you answer, if you buy a lot of things with cash, they will need to see where the money is coming from (and if you lie about having hidden cash, it helps the fraud case).

Also, many people somehow believe that not having a receipt for making a silver purchase would benefit them (perhaps they are envisioning a team of government agents tearing through their house looking for receipts, which only happens in movies and to those wearing tin foil hats). The government doesn't care if you purchased silver, only if you reported any gains. If you did sell silver, and get audited, you'll need to have the receipt from purchasing it to prove what you gain (or loss) is. Without the receipt, you could be at the mercy of the IRS.

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