Is Gold Taxable? The Truth About Capital Gains Taxes

pop quiz which of these coins do you owe capital gains taxes on if you sell it a profit here in the united states the answer of course is whichever one you didn't lose in an unfortunate boating accident [Music] so let's just start this off saying that you should always pay your taxes you don't want to mess with the tax man he can take away all the things that make you happy and since you can't see me giving slow and dramatic winks throughout this video i'm going to speak as plain as i can here and then you can walk away from this with some basic info and then form your own conclusions so one of the big misconceptions is that the american gold eagle and the american silver eagle are exempt from capital gains taxes here in the united states this unfortunately is not true gold is classified by the irs as a collectible asset and that means it's subject to capital gains taxes it does not matter which gold coin it is they're all subject to the same taxes and the same goes for other precious metals whether it's silver or platinum palladium whatever they're all affected by short and long-term tax capital gains taxes so what does that mean if you buy a coin and sell it within a year that's short-term capital gains and what that means is it's it's uh taxed just like regular income so if you lose money on that coin then it's a loss on your tax returns if you make money on that coin it's a gain on your tax returns so if you buy a coin for fifteen hundred dollars you sell it for two thousand dollars there's a five hundred dollar gain there and that tax is going to be like normal income so effectively your highest tax bracket that again is if you buy and sell within 12 months now if you hold that same coin more than 12 months you're going to be looking at long-term capital gains and that's a little bit different because there's a cap at 28 and if you're thinking to yourself wait a minute i thought it was a 20 cap collectibles are actually handled differently than other assets say like stocks which have a capital gains tax limit of 20 percent the same goes for etfs so regardless of whether it's physical gold or silver or a traded gold or silver the capital gains taxes for collectibles work the same again with cap at 28 rather than the 20 that works for most other assets so this sounds pretty straightforward and it sounds pretty terrible but stick with me for a few minutes there are a few details i want to bring up the first detail you should know is how to figure out your cost basis really if we're going to just boil it down your cost basis is not just the spot price of whatever metal coin you bought it's actually the premium as well anything if you paid hundred dollars when spot price was fifteen hundred dollars your cost basis is sixteen hundred dollars so if you turn around and sell that coin for two thousand dollars your actual gains are four hundred dollars not five and if you paid to have that coin stored or appraised or anything like that that also factors into your cost basis now when you go to report that four hundred dollars you do that on schedule d a form 1040 i'm sure everybody will remember this uh it's just a section in your tax return where you talk about any additional gains now we've talked a few times about larger purchases so say 25 ounces of these canadian maple leafs that would actually trigger a 1099 b and it would no longer be on you to fill out because it will have been done for you the same goes for krugerrands or anzas or one thousand dollars face value of us constitutional silver or uh gold and silver bars that are one kilogram or one thousand troy ounces all of these things also will trigger that 1099 b and if you want that list again that's an easy google search now if you follow the tax laws to the letter it doesn't matter if you fill this out or somebody else fills it out for you through a 1099 1099b but because you can't see slow dramatic winks here you'll just have to imagine why some people might prefer to fill it out on their own so we're going to drift off of actual tax law here for a minute i get a lot of comments where people say you're an idiot if you sell to the local coin shop and they'll they'll direct them at me they'll direct them to other people in the comments but you can imagine why certain people might want to use cash to purchase their gold in the first place because if you use cash there's no actual record of the purchase and there's no record of the sale assuming it's not on that list that triggers a 1099 b so just between friends here we all know that gold is taxed and we all want to make sure that we pay our taxes but what gold are we talking about i don't i don't see any gold this is what people are talking about when they tell you they like to use cash for these purchases or they tell you they like to sell only for cash so when people tell you that 1099 b is a big deal or they say they try only to sell locally only to buy locally maybe they're not an idiot for not selling to appmex for that extra one percent so in my case i'm showing gold on a youtube channel so if i was trying to hide that gold you know i probably would be an idiot because here i am showing it so let's take a look at a few other factors because there are a few more details that are pretty important now if you sell other collectibles and you sell them for a loss then that's going to offset your gains so if you sold at a loss within the last 20 years you can carry that loss forward in what's creatively termed a loss carry forward so let's just say hypothetically that you sell a bunch of roosters and sovereigns at a bit of a loss and then a few years later you sell a bunch of american gold eagles at a bit of a gain well then the lost can actually cancel the gain again this is all hypothetical now you can't really carry forward again but when i go in to do my taxes if i have that gain but in the last few years i have a loss i can use that offset when i sit down with my accountant now just a little bit of real talk here it would be next to impossible to know what i paid for any of the gold that i've had any of the gold that i have it would also be extremely difficult to know exactly what i sold it for so when this math comes together there may or may not be a little bit of guesswork and because these transactions were cash no nobody has any idea whether or not that guesswork is accurate now again i try to do my best here but you can imagine that over the course of 10 years 20 years 50 years it gets a little a little hazy and i think it's probably a pretty good guess that over time people's gold just kind of i don't know falls off the books i'm not saying that's right i'm just saying that's realistically that's what happens okay let's throw a few more details in here if you were to inherit gold your cost basis is the market value of the gold or silver or platinum or palladium at the time that well at the time the person dies and in a happier scenario if someone gives you gold or silver or platinum or palladium it's the market value at the time that you receive it so if a person bought that medal 20 years ago that's not the cost basis for your capital gains it's at the time that you receive it so that at least is some good news for people who plan to give it to their kids and there are also ways to defer your taxes you can set up an ira to defer your tax until it's distributed to you just the same as as any other ira works so the logic of course is that your marginal tax rate will be lower once you retire so you use a trustee and they charge you a fee for administration and storage and then you take possession of that gold sometime in the future and you don't pay any taxes until that happens now all of that is on the up and up but outside of legitimate tax deferment options you can imagine that a lot of gold never ends up being reported in the first place and that's one reason there's so much misunderstanding of actual tax implications on precious metals in a lot of cases the person holding the gold has to volunteer that information before it would ever be subject to tax in the first place so if a person tells you that gold and silver are not taxable at the time of a sale they're wrong but but if a person tells you gold and silver are not taxable while they're giving you a slow dramatic wink then you'll at least know the whole story look let's be clear i'm not promoting that you you try to skirt taxes and in my case honestly i don't mess around with the irs at all if i have capital gains i pay my taxes and that's why i want to make it really clear once again that all my gold got lost in an unfortunate boating accident this is a touchy subject and not really one that i wanted to do a video on but i know there's a lot of misinformation out there so if you want details talk to a pro you need to talk to a tax professional rather than just listen to some guy on the internet because there's at least a decent chance that i have some of my details screwed up so if you didn't like any of the information i put out there don't kill the messenger i still hope you'll subscribe hit that like button and have a fantastic day you

Channel: 2 is 1

Views: 65,089

Rating: 4.9039688 out of 5

Keywords: is gold taxable, is silver taxable, irs taxes on gold, is gold taxed, gold taxes, reporting gold profits, reporting gold sales, are gold and silver taxed?, capital gains on gold, capital gains on silver, capital gains taxes on gold and silver, gold capital gains taxes, buying gold, selling gold, Selling gold coins

Id: HVRm-jiYbWE

Length: 11min 30sec (690 seconds)

Published: Tue Oct 20 2020