Connecticut, known as the "Constitution State," has a rich history dating back to the early colonial days. While it may not have been the epicenter of a gold rush like California, its residents still recognize that gold investing is a secure and long-term growth opportunity.
That’s why many Connecticut residents choose to invest in gold and buy precious metals for long-term growth. Many also invest in silver, platinum, and palladium to diversify their portfolios.
Before diving into the world of precious metals, you should be well-informed about both federal and state regulations. The IRS has specific guidelines regarding capital gains tax on gold, and Connecticut has its own set of rules concerning sales tax on precious metals.
When you sell gold or other precious metals, be prepared to pay federal capital gains tax as mandated by the IRS. Precious metals are viewed as capital assets and are categorized as collectibles. If you've held onto your precious metals for over a year before selling, you'll be liable for this tax.
The capital gains tax aligns with your marginal tax rate, capped at 28%. Depending on your income bracket, the capital gains tax rates can be 0%, 15%, or 20%. Here's a detailed 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|
If you're thinking about opening a precious metals IRA, it's vital to know which assets are IRS-approved. The IRS has stringent criteria for the types of precious metals permissible in an IRA:
Connecticut residents must also be aware of the state's sales tax when they buy silver, gold, or other precious metals. Even online purchases are subject to Connecticut's sales tax.
Connecticut has a statewide sales tax of 6.35%. However, this rate can be higher in certain localities, like particular cities and counties. As a result, investors who buy precious metals in Connecticut could pay more in certain locations.
On the bright side, Connecticut has a precious metals sales tax exemption. If you purchase more than $1,000 of precious metals, the sales tax is waived.
Gold coins usually weigh between one to two ounces, but some dealers might offer half-ounce and quarter-ounce coins. The quality of gold coins varies, with older ones containing 90% to 92% gold and newer ones boasting a 99.9% gold content. Some gold sellers also provide alloyed gold coins, which consist of 91.7% gold, complemented by silver or copper.
The gold coin price is often determined by its size and gold content. However, certain coins might be priced above the gold spot price due to their rarity, demand, and unique design elements.
Gold coins can be categorized into four types: