Prior to 2018, losses due to theft could be deducted as an itemized deduction, but the Tax Cuts and Jobs Act limited the theft loss deduction to losses attributable to a federally declared disaster until 2025.
There is a special exception for victims of Ponzi-type investment schemes. According to IRS Revenue Ruling 2009-9, if money put into an investment account with the expectation of profit is found to be fraudulent, any loss is considered a business theft loss and not a personal theft loss. Therefore, the personal theft loss limitation stated above does not apply. If you determine you qualify under Ruling 2009-9, you can take your loss as an itemized deduction. If your deductions aren't enough to itemize, you won't be able to deduct the loss.
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