Scams

[veteran007]

 It wasn’t until a few weeks ago, I learned that I was set up or taken advantage as a senior citizen, with funds sent to another country by unscrupulous persons, in other words I was scammed and the amount significant. I was reading the section on Casualties and Thefts. Could this section be used to declare the theft of my funds. Recently, I informed the FBI of this scam as was directed to me by the DOJ’s senior hotline (over 76) to report the incident under the FBI’s ic3.gov web site. Since this matter is international in scope, the local authorities may not be the best use of their time and searching for scammers in another country. Since these assets are taxable could I not declare my losses for 2022 as a theft deduction? I am aware that thefts, according to the reading, does not strike at this kind of theft, but it could be labeled as “Extortion Embezzlement or even Blackmail” The last line in the explanation states that “the taking of money or property through fraud or misrepresentation if it’s illegal under state or local law”. The extortion in this case is holding out potential assets for recovery by soliciting more money from me. 

[ErnieS0]

Claim this on your 2023 income tax return that you file next year.

The IRS says, “Generally, you can deduct the part of your casualty or theft loss that isn't reimbursable in the tax year the casualty occurred or the theft was discovered.”

You said you only learned of this was a scam “a few weeks ago,” meaning it was discovered in 2023.

You really don’t provide enough information for anyone on Community to confirm you have a theft loss. It would be a Ponzi-scheme investment loss or potentially a personal bad debt.

Learn more at "About Casualty Deduction for Federal Income Tax."

[veteran007]

Hi Ernie50–your right, I’ll report it next year. But just to be clear, over the last two years 2021 and 2022, I had serious concerns that the individuals were up to no good, but I just could not prove that this was happening. Then last month, I wrote them an email admonishing their emails with lies and discrepancies, and denouncing them as imposters. I think I broke their cover. They then admitted that everything I said was correct. In fact, one of them exclaimed that he wasn’t a he but a she. And provided me with a picture and a name belonging to a Russian porn star. Looking up the name I confirmed the pictures didn’t match up. Not  more than a few days latter, they stopped communicating. So, in this year I’ll claim the truth was discovered and all my losses will stop. On the federal return their is a date of 2018 to 2025 where thefts can not be included on Federal returns. Is that right? Anthony 

[DianeW777]

Yes.  The IRS is indicating that theft can only be used if it is in a federally declared disaster area and it's personal use property.

• For tax years 2018 through 2025, if you are an individual, casualty or theft losses of personal-use property are deductible only if the loss is attributable to a federally declared disaster.

Review the information about Ponzi Schemes as well. Instructions Form 4684

• Help for Victims of Ponzi Investment Schemes 

[veteran007]

No doubt that I was fooled into a Ponzi scheme and these imposters were very clever and used vehicles to entice me into pouring money into it. It’s embarrassing to say the least but I have learned my lesson. In the meantime, I notified the FBI through their ic3.gov web site about what happened and they haven’t contacted me now since 3 weeks ago. 

In the meantime, I have a problem in what I should do regarding another issue. I submitted an amended paper return for 2021 to the Feds and to the State containing crypto currency losses on a Form 8949. The State rejected my paper format after printing and told me to reformat the printing flipping side to side. The format I used flipped forward and they said their processors would produce garbage. Do you know if the paper version for the Federal return should be flipped side to side like that of the State?