Many people have sold some gold or silver jewelry this year as the precious metals soared to new highs.
Or you may be thinking of unloading yours in the near future.
But some sellers are now wondering, " Do I need to report my bounty to the IRS?"
Sure, gold may be down from its recent all-time highs, but the rush is still on to sell, sell, sell. People everywhere are raiding their jewelry boxes for old chains and earrings, then heading out to a local gold buyer.
The news is usually good, in some cases very good.
But Is It Income?
As you cash that check you may be wondering: Is this reportable to the IRS as income? Is my gold shop reporting it?
Stores will often report large transactions of gold bars or coins to protect themselves from fraud.
But the good news is they are not required to report sales of jewelry, according to Clay Wallen of Hyde Park Rare Coin in Cincinnati.
"Under current guidelines, jewelry is actually a non-reportable item. So it's not something that's going to be 1099'd or a report sent to the IRS in that situation," Wallen said.
Selling gold is not considered to be income.
However, the IRS states jewelry is a "collectible," just like coins or stamps, and is therefore subject to a capital gains tax of 15 percent if it was owned more than a year.
If you bought the jewelry in the past year, you could owe 28 percent or even 35 percent depending on your income bracket.
What You Could Owe
That means if you bought a necklace for $100 and sold it for $200, you technically owe the IRS $15 (or $28 or $35) in capital gains tax, if you report it.
"It's really up to the individual to handle that with their accountant," Wallen said.
The Bottom Line
It's your choice whether you want to report your sale to the IRS. Many people selling small amounts don't.
I'm not a financial advisor, so I'm not going to advise you what to do or not do. And I will never suggest avoiding paying the IRS.
But this is one reason a lot of people request cash -- instead of a check -- when selling their jewelry.
Whatever you decide, as always, don't waste your money.
Don't Waste Your Money is a registered trademark of the EW Scripps Co.
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