Although gold was first discovered in Michigan in 1844, it was 36 years later that the first gold mine in Michigan was established. The Ropes Gold Mine ran for 14 years and produced around $645,792 in gold and silver. In the following years, prospectors discovered more than 75 gold mines and prospects in the state's Upper Peninsula.
To this day, gold is a popular investment option for Michigan residents looking to buy precious metals for long-term and relatively stable growth. However, before you start to invest in gold, make sure you're familiar with federal laws. When ready to buy gold online, visit a dealer's website to browse IRS-approved precious metals.
All profits from the sale of precious metals are subject to federal capital gains tax. Capital gains tax is due if the precious metals are sold after being kept for at least a year. The gold seller will be taxed on the profit made from the transaction.
The amount you owe in federal capital gains depends on your income. The rates are 0%, 15%, or 20% but can reach up to 28%. Here 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|
The IRS has strict regulations when it comes to investing in a gold IRA. For example, not all types of precious can be held in a retirement account. Here is a list of the requirements to consider when choosing your precious metals:
You must report your gains to the IRS if you sell gold or other precious metals. To report the income, the seller must complete Schedule D of Form 1040 on their annual tax return. Keep in mind that Form 1040 can be submitted with your annual tax return.
However, some transactions must be reported immediately after the sale is complete. Form 1099-B is required at the time of sale when you sell:
Additionally, some states also levy a tax when investors purchase precious metals. According to Michigan law, gold, silver, and platinum investment coins and bullions are exempt from sales tax. However, sales taxes apply on certain items such as copper and palladium products; gold that is less than 90% pure; silver or platinum bullion products; accessory items; and processed items. These regulations must be considered when you invest in silver and gold or other precious metals.
Accessory items include holders, tubes, and coin flips. On the other hand, processed items are classified as precious metals that third parties process into items that are valued for more than their precious metal content, such as colorized coins.
A standard gold coin weighs between one and two ounces. Nonetheless, you may find smaller gold coins, such as half-ounce, quarter-ounce, and tenth-ounce coins on display at some dealers. In addition, gold coins vary in quality. For instance, earlier coins were made of 90% to 92% gold, whereas contemporary ones are 99.9% pure. On the other hand, alloyed gold coins are made of 91.7% gold, with the remainder made of silver or copper.
There are four types of gold coins: