I was a victim of a crypto scam and lost a large amount of money. Police/FBI notified. Is this deductible?

Forum|Forum|5 months ago
January 5, 2026
3 replies
14 views

Scammer posed as government official. bitcoin involved

TurboTax Online

xmasbaby0

Level 15

Losses from thefts or scams are not deductible unless they are the result of your being the victim of a Ponzi scheme.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Mike9241

Level 15

check this link it should answer your questions. (when the "personal" it's referring to situations where there was no profit motive)

https://jakeclaver.substack.com/p/how-to-claim-tax-losses-after-falling

BE wary of sites that promise recovery.

Mike9241

Opus 17

Level 15

Investment losses are deductible, theft is not. In other words, if you invest in a legitimate business, and it goes bust through bad luck or even bad management, you can deduct the loss. If someone gets your bank details and drains your account, that is theft and not deductible.

That means there is a gray area around cryptocurrency losses. Since you describe this as a scam, and there is a police report, then the "first look" position is that it is a non-deductible theft. Whether you could reasonably argue that it is a deductible investment loss (after taking a "second look") depends on the totality of the circumstances. It would be your decision if you want to take the deduction and risk an audit. You may want to consult a professional who will stand behind you if you are audited.