Question on coin taxes................
Geoman
Posts: 2,491 ✭✭✭
Ok, I am a part-time dealer that knows a little bit about coins, but not much about taxes. I did register my business name with the secretary of state, as I needed a Tax ID number to set-up at some shows. I kept track of what I sold and my expenses last year and know I need to "pay" the government their share. I received a tax revenue form in the mail to complete and send payment to the state. So far, so good.
However, I have been given conflicting advice on how to claim sales/profit. For example, I buy a coin at $1,000 and sell it for $1,100. My profit would be $100. I thought I would owe the government sales tax on the profit ($100). But someone else told me I need to pay tax on the $1,100. Which is it?
Please feel free to PM me if you prefer, or suggest other things you think are helpful. Thanks!
However, I have been given conflicting advice on how to claim sales/profit. For example, I buy a coin at $1,000 and sell it for $1,100. My profit would be $100. I thought I would owe the government sales tax on the profit ($100). But someone else told me I need to pay tax on the $1,100. Which is it?
Please feel free to PM me if you prefer, or suggest other things you think are helpful. Thanks!
0
Comments
but you get to deduct expenses
IE you sold 2000.00 at a show you had 1500.00 in them , you have a gross profit of 500.00
Now your expenses, cost of table , milage to show, 100.00
You've then made a 400.00 NET profit, that is taxable
A little more complicated than that but you get the idea
<< <i>the 100.00,
but you get to deduct expenses
IE you sold 2000.00 at a show you had 1500.00 in them , you have a gross profit of 500.00
Now your expenses, cost of table , milage to show, 100.00
You've then made a 400.00 NET profit, that is taxable
A little more complicated than that but you get the idea >>
I disagree with this premise. We are talking about sales taxes here, not income taxes.
My understanding is that if you bought an item for resale and did not pay sales taxes then, you have to pay sales taxes for the full amount when you sell an item for retail.
Edit to Add Example:
Let's say you bought an item for $150, and sold an item for $200. You charge the buyer the full sales tax for the $200, so why should you as the seller not have to pay the full sales tax on the $200?
<< <i>the 100.00,
but you get to deduct expenses
IE you sold 2000.00 at a show you had 1500.00 in them , you have a gross profit of 500.00
Now your expenses, cost of table , milage to show, 100.00
You've then made a 400.00 NET profit, that is taxable
A little more complicated than that but you get the idea >>
OOPs
Thought he had sales tax down and was figuring income tax
I agree sales tax is on the full amount of the sale
I meant income tax.
Just file a Tim Geithner tax exemption and don't worry 'bout it.
Oh and having that business licence means you should of not paid sales tax on it when you got it.
At least that is how it was explained to me by a book keeper that I used to be married to.
If you pay $1,000 and sell for $1,100, your taxable income is $100. However, the time you held the coin in inventory determines how you get taxed and at what rate.
If you hold the coin in inventory for more than 1 year, treat the profit from the sale as a long term capital gain, which should be a lower rate than the income rate.
Short term capital gains are treated as ordinary income; you get taxed at ordinary income rates.
You get to deduct business expenses from your taxes. This would include show fees, potentially travel to shows (milage if driven would be 55-1/2 cents per mile).
If you sell a coin for a loss, its either a short-term or long-term capital loss. Keep good records.
Sales and use tax is another animal. Does your state collect sales tax on coins and bullion? If so, then you've got a whole other can of worms.
Depending on how you are organized, LLC, corporation, sole proprietorship, you can have a whole other boatload of taxes that you might have to pay.
Spend the money; get a good accountant. Then you've got someone to sue if they screw up!
Really, just call the Tim Geithner Tax Service Division at 1-800-USA-MINT.
Ok, all kidding aside. Be very careful about the well intended advice you have just received. I know more than what I want to know about taxes, and I can honestly say that some of the advice prescribed in this thread is not entirely accurate. The best advice you just received herein is to get a tax accountant who has experience with taxes for coin dealers. Best of luck to you.
$ 1,050 and it takes 4 hours to travel from Miami to Wash. D.C. , how much do you owe in taxes?
Simple, you just send $ 950 to Wash. D. C. and you should be alright,,,for now,,,until you get
a letter from Geitner saying his boss says you need to pay more!
R.I.P. Bear
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)