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 Therefore, this information may be inaccurate or outdated (but to the best of our knowledge is not).

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, which means that gains are usually at the 'Collectibles' rate of 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.

What Else Should I Know?

• There are certain reporting requirements that dealers may need to handle, so it is possible that the IRS may know about sales of bullion.
• It is very important to keep track of your purchases (and any trades you may make). If you do not, when you sell you may find that you cannot determine what your gain was. In that case, you may need to report your basis as 0, and you could end up paying more taxes than your gain!
• Barter is taxed. So if you paid $500 each for 4 1-ounce U.S. gold eagles ($2,000 total), and then later buy a used car worth $4,000 for those same 4 eagles (now worth $1,000 each), the IRS considers it the same as having sold them. As such, you would need to report a capital gain of $2,000 (the difference between the $4,000 value and the $2,000 basis).
• You cannot treat gold or silver coins at their face value (Frivolous Position #13). In the barter example above, the seller could not claim that he sold his car for $200 (the face value of those gold eagles). This may result in a $5,000 'frivolous return' penalty!
• You cannot claim that gains on gold or silver aren't taxable since gold or silver preserve value, and protect against the decline of fiat currency. See Frivolous Argument #15 here.

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