Reporting and Taxation on Silver Purchases

If you’ve decided to invest in silver, congratulations! You’ve made an investment into one of the best performing precious metals. When buying silver, you’ll have to consider the additional associated costs- shipping, handling, premiums, as well as tax implications. Let’s take a look at some of the more pertinent tax issues to consider when buying silver.

Different Applicable Taxes

The great thing about buying silver is that in most cases, you do not have to pay taxes. Value Added Tax is not applicable to silver coins because they can also be used as legal tender. Goods and Services Tax is also not applicable to the purchase of 99.5% pure silver bullion bars or coins. On lower purity silver or silver numismatic coins, Goods and Services Tax may apply.

For most silver buyers, the only tax to pay is sales tax, and that too is dependent on the state you live in. Some states don’t have sales tax, while others do. If you live in a state that taxes and you purchase above a certain amount, you can be exempt from paying sales tax.  If you live in a state where sales tax is applicable but order from a retailer that is out-of-state, you may not need to pay sales tax.

Internal Revenue Service Tax Regulations

Don’t forget to always file your tax forms and on time. With the current silver market, you may stand to make a neat profit. If you don’t comply with IRS regulations, however, you could have your silver confiscated and any profit would be completely negated with all the fines you’d be penalized with.

Form 8300 is the main IRS form to keep in mind when filing taxes in the United States. This is required for cash purchases of silver worth over $10,000. For any other methods of payment, such as bank wire, personal checks, cashier’s checks or credit cards; you do not need to report the purchase on Form 8300. Even if it is higher than $10,000, you do not need to report the purchase. Form 8300 only requires the reporting of transactions made in cash because all other forms are easily traceable- checks will be documented by the bank, etc.

If you’re buying silver internationally, you face different tax implications. If over a certain value, you will pay customs duty as well as Goods and Services Tax. You’ll also have to report your holdings on form 8938 (Statement of Specified Foreign Financial Assets) and form TD F 90-22.1. If you’re buying large amounts of silver, it is worth noting that it may be better for you to make your purchase from an international dealer, as the premiums can be lower outside of the United States.

Consult with your financial advisor to make sure you are filing the proper forms correctly. To make filing forms easier, save all supporting documentation and records of your silver transaction.

Tax Exemptions in Delaware Depositories

If you choose to store your silver in a depository located in Delaware, you can receive a tax break and are exempt from sales tax, income tax, and other taxes. Delaware falls under the status of tax haven. This applies if you are buying an amount of silver and the depository receives the shipment, not you. If you plan on buying a large amount of silver, consider the benefits of storing it in Delaware. Sales tax and other taxes can really add up in numerous transactions.