The California Gold Rush of 1848 sparked a mass migration toward to West in the hopes of striking it rich. And to this day, Golden State residents are still investing in gold as a long-term growth opportunity. However, before purchasing gold and other precious metals, make sure you’re familiar with federal and state laws. Notably, the IRS imposes capital gains tax on gold purchases, and California has its own statewide sales tax.
If you’re ready to start buying gold online, visit a precious metal dealer’s website to browse their products. From the dealer’s list of offerings, you can choose gold, silver, and other precious metal coins and bars to invest in. However, in some instances, you may need to contact a representative to open an account and choose which precious metals you’d like to purchase.
When selling physical gold and other precious metals, you will be subject to federal capital gains tax by the IRS. This is because the IRS considers precious metal investments to be capital assets that are classified as collectibles. As such, capital gains tax is owed if the precious metals are sold after being held for at least one year.
The capital gains tax is equal to your marginal tax rate, reaching a maximum of 28%. The capital gains tax rates are 0%, 15%, or 20%, depending on your income. The following is a breakdown of the capital gains tax rates for 2023:
|Single||Up to $44,625||$44,626 to $492,300||Over $492,301|
|Head of household||Up to $59,750||$59,751 to $523,050||Over $523,051|
|Married filing jointly||Up to $89,250||$89,251 to $553,850||Over $553,851|
|Married filing separately||Up to $44,625||$44.626 to $276,900||Over $276,901|
When looking to open a precious metals IRA, you must be careful about which types of assets you invest in. This is because the IRS has strict regulations regarding the types of precious metals that are allowable in an IRA:
When you sell gold or other precious metals, you are required to report the profits to the IRS. To report the income, sellers must complete Schedule D of Form 1040 on their annual tax return.
However, depending on the type of metal that is sold, Form 1099-B might also be required by the IRS. Form 1099-B is required at the time of sale when you sell:
Gold coins typically weigh one to two ounces; however, half-ounce and quarter-ounce coins may also be available at some dealers. Gold coins also come in varying qualities, with older minted coins containing 90% to 92% gold and newer coins containing 99.9% gold. Some dealers also sell alloyed gold coins, which contain 91.7% gold, with the remainder being made up of silver or copper.
There are four types of gold coins: