Keep your gold and silver investments for at least one year. They're taxed on ordinary income, meaning your earnings won't qualify for the special, lower capital gains tax brackets. To avoid this, you could consider an IRA rollover to Gold after at least one year, if possible. Otherwise, you could face higher income tax rates. The best way to avoid this is to invest in funds and assets that don't buy physical gold and silver. A particularly good approach is to look for ETFs and mutual funds that specify this approach in their investments.
Assets, such as futures contracts and options, are not considered investments in physical assets, so the IRS treats them as ordinary capital gains with a maximum rate of 20%. Alternatively, you can also invest in products that invest in physical ingots and effectively purchase the metals on your behalf. For example, you can buy an ETF that contains quantities of physical gold in its portfolio. In this case, you will hold gold ingots by proxy.
Long-term earnings on ingots are taxed at the ordinary income tax rate, up to a maximum rate of 28%. Short-term earnings on ingots, like other investments, are taxed as ordinary income. An asset must be held for more than one year for gains or losses to be long-term. And since gold is an investment asset, when you sell your gold and make a profit, it's taxed as capital gains.
Gold is often taxed differently than other investments, and tax rules vary depending on which of the many different ways to invest in gold you choose.
