My friend lost her job due to the Coronavirus, applied for a new one, got "hired" by a scammer, fell into a money order scam, and lost $8k. It's kinda a stretch, but can this be deducted under a federally declared disaster when she files her taxes next year? If not, can it be written off or deducted, whether in full or partial? If it helps, we're in California
If you are a victim of a scam or fraud, you can claim your loss as a casualty and theft loss in Schedule A - Itemized deductions.
You do not have to send any supporting documents with your tax return which can be e-filed. You have to keep all documents such as police reports, letters, e-mails, etc...) in your tax records.
However, the allowable loss has to meet a high threshold.
From the loss, you will deduct first $100, then deduct 10% of your adjusted gross income to arrive at the allowable loss.
TurboTax will make all the calculations for you.
To enter your loss in TurboTax, please follow these steps:
- Click on Search on the top right of your screen
- In the search box, type casualty loss
- In the search result page, click on Jump to Casualty loss
- TurboTax will take you through a questionnaire where you can enter the details of your loss
**Mark the post that answers your question by clicking on "Mark as Best Answer"
really on schedule A. line 15 applies only to federally declared disater or net qualified dsaster losses
- The Act defines a net disaster loss as the excess of “qualified disaster-related personal casualty losses” over personal casualty gains, as defined in Code Sec. 165(h)(3)(A). Qualified disaster-related personal casualty losses, in turn, are losses described in Code Sec. 165(c)(3) which arise:
- In the Hurricane Harvey disaster area (see below for the distinction between “areas” and “zones”) on or after Aug. 23, 2017, and which are attributable to Hurricane Harvey;
- In the Hurricane Irma disaster area on or after Sept. 4, 2017, and which are attributable to Hurricane Irma; or
- In the Hurricane Maria disaster area on or after Sept. 16, 2017, and which are attributable to Hurricane Maria. (Act Sec. 504(b)(3))
the there is 165(h)(2)(A)
(2)Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income
(A)In generalIf the personal casualty losses for any taxable year exceed the personal casualty gains for such taxable year, such losses shall be allowed for the taxable year only to the extent of the sum of—
(i)the amount of the personal casualty gains for the taxable year, plus
(ii)so much of such excess as exceeds 10 percent of the adjusted gross income of the individual.
however there is code sec 165(h)(4)(A) which says
(A)Personal casualty losses allowable in computing adjusted gross income to the extent of personal casualty gains
In any case to which paragraph (2)(A) applies, the deduction for personal casualty losses for any taxable year shall be treated as a deduction allowable in computing adjusted gross income to the extent such losses do not exceed the personal casualty gains for the taxable year
in other words personal casualty losses are no longer deductible
since she had not yet started a business when she got scammed, I don't think it's a business casualty loss