Do Americans Have to Pay Taxes on Silver Investments?

The Internal Revenue Service (IRS) considers silver a collectible. This means you have to pay capital gains tax on it. Gains are taxed as ordinary income if you hold silver for one year or less. Rates for short-term gains can be significantly higher than the long-term capital gain rate of 28 percent. Keep reading as the experienced dealers from First National Bullion and Coin, San Diego collectors’ go-to choice for up-to-date information and outstanding service, explain the ins and outs of paying taxes on silver.

Capital Gains

Capital gains are the profits you get when you sell an asset. Depending on how long you owned the assets, they can be subject to either short-term or long-term tax rates. According to the IRS, the 28 percent applies to individuals in the 32, 35, and 37 percent tax brackets. You only need to pay capital gains taxes when you sell your silver if you earn more than what you originally paid for the silver. Physical silver sales must be reported on Schedule D of Form 1040 when you file your tax return.

Also, according to the IRS, silver held reported as a sale must be at least 99.9 percent pure. Eligible silver investments include:

• American Silver Eagle coins
• Canadian Silver Maple Leaf coins
• Silver bars and rounds

The Cost Basis of Physical Silver

Another factor that impacts the amount of tax owed on silver is the cost basis. The cost basis is equal to the amount you paid if you bought the metals yourself. The IRS does allow you to add appraisal and storage costs.

If you received silver as a gift, the cost basis is the market value of the silver on the date the giver purchased it. However, if the market value of silver is less than what the giver paid for it, the value is based on what the market value is on the date it was given as a gift. If silver is inherited, the cost basis is the value of silver on the market on the date the person passed away.

Records You Should Keep

You should keep receipts for silver you buy or receive as a gift. Also, keep records and receipts for prices and dates of sales if you part with your silver. Additionally, keep records of any associated expenses, such as storage or insurance costs you can deduct from the cost basis. You’ll also need to keep track of the market value of silver when you sell it if it’s more than what you paid.

Reducing Your Tax Burden

With capital gains taxes, you pay what you earn beyond what you already spent toward your initial purchase. The IRS also considers any associated costs, such as dealer premiums and storage fees, which will reduce the taxable gain you must report when you sell. Capital losses on silver investments and other collectibles can also be used to offset a tax liability. You can report up to $3,000 in silver losses for any given tax year.

When they’re looking for the best place to buy silver bullion, San Diego precious metals collectors can rely on the trustworthy professionals at First National Bullion. We can answer all your questions and help you find all the information you need on how precious metals can be a valuable part of your portfolio. Give one of our experienced dealers a call today.

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.