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    • Gold IRA Tax Rules

    When it comes to IRA investments in gold, you won’t have to pay the 28% collectible tax rate. You will be subjected to the marginal tax rate. This also means you’ll pay over 28% in taxes if you fall in a high-income tax bracket. The above means your income bracket determines how much you’ll pay in taxes.

    Taxes & Gold

    The first thing you need to do when it comes to investing in gold is choose which type of investment will make you the most money. At the same time, you don’t want to be hit with a massive tax bill. You must look at gold classification and tax treatment.

    The Internal Revenue Service treats gold investments the same way they treat collectible investments. Essentially, investing in gold is treated the same way as investing in comic books or pieces of art.

    There are a whole host of challenges associated with investing in gold, at least from a tax perspective. Investors face two main scenarios, with the first one being you buy gold and you sell it after holding it for less than a year. In this case, your transactions will be treated as short-term capital gains or as ordinary income.

    In the second scenario, you buy gold and sell it after you have had it for over a year. In this case, your transactions will be taxed as ordinary income, but the tax rate will be capped out at 28 percent.

    For most gold investors the above will be a huge tax hit. For many years investors have looked for alternative vehicles for putting their money in gold to lower their tax bills and increase their bottom line.

    At the time of this writing, investing in gold via an IRA is one of the most affordable options out there. We will go over gold IRAs in the following section, and we will talk about how you can improve your return-on-investment after taxes by choosing to invest in an IRA.

    Purchasing Gold For Your IRA

    To maintain the tax benefits, you cannot add gold you already own to your Self-Directed IRA; you must purchase the gold with funds through the IRA. If you do already own gold, you could sell the gold, then fund your IRA account with the proceeds and buy gold again through the IRA.

    You must purchase the gold for your IRA through your custodian. A custodian is an IRS accredited financial institution responsible for the purchase and safety of your assets. Your IRA company will be able to offer this service, either through an existing relationship with an external custodian or as part of their organization.

    To Fund Your Ira To Make The Purchases In Gold You Can Typically Use One Of The Following Ways

    Complete A Rollover

    If you have assets in a 401(k) or other types of retirement account, you can roll these assets into your Self-Directed IRA to make precious metal purchases.

    Transfer IRA Assets

    You may already have investments in an IRA, you can transfer these stocks, bonds, or cash into your gold IRA. You can then use them to buy gold or other precious metals.

    Depositing Cash

    You can make a wire transfer from your bank account, once the cash is available in your IRA, you can use it to purchase gold. Not all custodians offer the same quality of service or costs.