When selling gold and silver, reporting requirements depend on several factors:
IRS Reporting by Dealers: Dealers must file Form 1099-B for certain transactions: Gold bars 1 kilo (32.15 oz) or larger, Silver bars 1,000 oz or larger; Specific coins like American Gold Eagles (25+ oz), Canadian Maple Leafs (25+ oz), and South African Krugerrands (25+ oz)
Your Tax Obligations: Capital gains tax applies to profits from precious metals sales, so you need to report gains/losses on Schedule D of your tax return. Precious metals are considered "collectibles" with a maximum 28% tax rate (vs. 15-20% for other capital gains). You must report regardless of whether you receive a 1099-B.
Cash Transaction Reporting: Cash payments over $10,000 trigger Form 8300 filing by the dealer. This includes cashier's checks, money orders, and cash equivalents.
Record Keeping: Keep documentation of purchase price, sale price, dates, and any related expenses to calculate your cost basis accurately. The key is that you're responsible for reporting capital gains/losses on your tax return even if the dealer doesn't issue a 1099-B form.
But when you own your precious metals through an IRA, then there are significant difference that work to your benefit:
No Immediate Tax Reporting: Sales within the IRA don't trigger immediate capital gains taxes, so there's no Form 1099-B reporting requirements for internal IRA transactions. Gains remain tax-deferred (traditional IRA) or tax-free (Roth IRA).
Distribution Rules: Traditional IRA distributions are taxed as ordinary income, not capital gains. Roth IRA qualified distributions are tax-free. Early withdrawal penalties (10% before age 59½) may apply.
Required Minimum Distributions (RMDs): Traditional IRAs require RMDs starting at age 73. May force liquidation of precious metals if no cash available.
Storage Requirements: Must use IRS-approved custodian/depository. Cannot store at home or in personal safe deposit box. Custodian handles all transactions and reporting.
Prohibited Transactions: Cannot personally handle or take possession during transactions. All sales must go through the custodian.
Key Advantage of a Gold IRA: The main benefit is tax deferral. You can buy/sell precious metals within the IRA without immediate tax consequences, allowing for portfolio rebalancing without triggering taxable events. The IRA wrapper essentially shields the precious metals transactions from immediate tax reporting requirements that apply to direct ownership.
If you are interested in starting a Gold IRA, contact us to learn more.