How much gold can I buy with cash

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If you are asking yourself how much gold you can buy with cash then look no further as in this article we will cover the cash limits on gold purchases.

The short answer is: You can buy no more than $10,000 worth of gold with cash.

But you can buy as much gold as you want but if you want to pay for it with cash there are some requirements for making the purchase legal and avoiding issues with the Internal Revenue Service of your country.

You must know however that no government regulations require the reporting of the purchase of any precious metals, per se.

If payment is made by cash greater than $10,000, however, it becomes a “cash reporting transaction”.

It’s not the gold that the government wants reported but the cash. Such reporting applies to ALL business transactions involving more than $10,000 cash.

Limit to Gold Purchases with Cash

You can buy any amount of gold you want with cash, but if you want to buy more than $10,000 worth of gold with actual cash then a set of requirements kick in to make the purchase legal.

In this case you’ll need to fill out a form 8300 with your basic info such as your name, address, and social security number.

The dealer must present you with this form or else they can face high fines that could be as high as $25,000.

You can get form 8300 through this link here.

Which Forms of Payment constitute cash?

This regulation applies to cash – greenbacks, paper money, however it does NOT apply to personal checks, wire transfers, or money market withdrawals.

When it comes to gold and other precious metals, the term “cash” refers to the following methods of payment when their transaction total is less than $10,000:

  • Cashier checks
  • Money orders
  • Bank drafts
  • Traveler’s checks

The term “cash” also applies to any US or foreign currency that is received during a transaction.

IMPORTANT:  Any transaction made with the previously mentioned forms of payment, which exceed $10,000 will not be subject to reporting to the IRS as the bank has already reported these checks.

For example; If a customer were to visit a local coin shop and paid for a $12,000 purchase with a cashier’s check, this purchase would not be reported since the cashier’s check exceeds the $10,000 criteria and such, reports would be the bank’s responsibility.

Payments using PayPal, bank wires, credit/debit cards and ACH transfers are also exempt from reporting regardless of the purchase amount.

Multiple Transactions

If you were to purchase gold or other precious metals within the span of 24 hours then said purchases are also considered reportable.

For example; If a customer were to visitor a local coin shop and pay for a $8,000 purchase in cash and then returned a few hours later within the same day and made another $3,000 purchase in cash then the coin dealer would have to report these purchases since these transactions are related.

Similarly, if a customer were to make two separate online purchases of $5,000 and $6,000 using bank drafts within 24-hour time frame, these purchases would also be related transactions and are therefore subject to reporting.

Why is this the case?

In the United States, Federal law requires financial institutions to report currency (cash or coin) transactions over $10,000 conducted by, or on behalf of, one person, as well as multiple currency transactions that aggregate to over $10,000 in a single day.

These transactions are reported on Currency Transaction Reports (CTRs) and in the case of gold your dealer will have to hand you the 8300 form and you’ll have to fill It with some of your basic information.

Be Advised

Some dishonest coin dealers and customers may attempt to get around this policy but intentionally spacing out a series of payments over the course of several days, making sure that individual payments do not meet the reporting criteria.

This breach of law is referred to as “illegal structuring” and is considered a form of money laundering.

Most banks are aware of this practice and are likely to take notice of customers who repeatedly make precious metal payments with more than one check.

Consequences of dishonest gold dealing

In situations like these, the bank will close your account and report these payments to the IRS which would result in criminal charges against both the customer and the coin dealer.

Do I need to pay taxes If I buy gold with cash?

The short answer is Yes. Gold (and all precious metals) are considered to be collectible assets and are taxes on short and long-term capital gains.

The sale of physical gold and other precious metals needs to be reported on Schedule D of form 1040 on your tax return.

Depending on the type of metal you are selling, form 1099-B must be submitted to the IRS at the time of the sale, as such sales are considered income.

Metals that require filling form 1099-B

Some of the precious metals that require the filling of form 1099-B to the IRS include but are not limited to:

  • $1,000 face value or U.S 90% silver dimes, quarters, or half dollars
  • 25 or more 1-ounce Gold Maple Leaf
  • 25 or more 1-ounce Gold Krugerrand
  • 25 or more 1-ounce Gold Mexican Onza coins.
  • 1kg Gold bars
  • 1000 troy ounce Silver bars

Commodities that don’t require filling form 1099-B

One exception of a precious metal item that does not require filling form 1099-B are American Gold eagle coins.

I your gold does require filling form 1099-B you can get the form through this link.

Lower your taxes when investing in gold

Assume you purchase 100 ounces of physical gold today at $1,330 per ounce. Two years, later, you sell all your gold for $1,500 per ounce. This means that you are on the 39.6% tax bracket.

The following scenario occurs according to investopedia:

Cost basis = (100 x $1,330) = $133,000

Asset Sale = (100 x $1500) = $150,000

Tax due = 28% (Tax cap) x $17,000 = $4,760

If you want to lower your tax the way to do so is by increasing your cost bases, basically offsetting tax liability.

For example: IF you sell silver at a $500 loss, then you net these amounts and only owe $4,260. Or you can save the $500 as a loss carry forward for the future.

Another way to increase your cost basis is to include the premium you pay on the gold and add in storage costs.

Always remember: Gold (and all precious metal) capital gains are capped at 28% tax but if you invest in gold through gold stocks the tax rate for stocks capital gains is capped at 20% however if you buy a gold ETF then the tax cap is still 28% because you are buying the underlying asset.

Bottom Line

Always take into consideration that whenever you are investing either in physical gold through gold bullion or in digital gold through a Gold ETF, mutual fund or stock you must pay your due taxes on capital gains.

However, if you want to lower you capital gains taxes or want to outright avoid paying capital gains taxes then we suggest you take a look at this article on how to avoid paying capital gains taxes on gold.

We hope this article helped you, for more information on investing in gold and other precious metals, commodities, and jewelry we kindly ask you consider visiting our home page.

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