Selling gold is a quick way to make profits, but like a majority of transactions, the gold you sell for cash has taxes involved. Tax laws vary each year, but having a basic overview will help you understand what you need to pay and how you can get the most out of your cash for gold transactions.
Do You Have To Pay Taxes When You Sell Gold For Cash?
Yes. Gold is considered an asset by the IRS and you must pay taxes on any profits you made from the gold. In most cases, the IRS will not be informed of a transaction unless it is a high amount, but you still need to report the extra income as part of your taxes. Specifically, you should report on the profits you make from gold is known as capital gains.
What Are Capital Gains?
The term capital gains refers to the amount you are taxed on for assets. Gold is considered a precious metal, so it falls into the 28% tax bracket. The complete amount you receive for your gold is not the amount you are taxed on. You are only taxed on the profits you have made for the gold.
So, if you purchased a gold necklace for $1,000 and sold it for $1,500, then you would only be taxed on the $500 in profits you made. The 28% taxes would then be around $140. Even then, the tax amount varies based on income, deductions, and other factors.
What If You Don't Know the Original Purchase Price?
If you do not have receipts or other information, then you can base the original value on the year you received the gold. A tax professional can guide you through the various paperwork and information needed for the taxes. The worst thing you could do is ignore the tax costs and then end up paying penalties in the future.
In some cases, you may have a lot of jewelry or gold pieces you want to sell off. You can avoid the capital gains tax by selling them at the same amount you paid for. A gold buyer can walk you through the process and help you get cash without all the extra taxes. Even with a same value purchase, you should still seek tax advice to ensure you follow through with your transactions and follow the stock correctly.
Getting cash for gold can be another way to improve your finances. Contact gold buyers to learn more.
Share4 February 2021
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