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rfcenbgineer
Returning Member

Can you write off fraud?

I was scam out of a large amount of money, they were fraudulent in there scheme.
So can I write this off my income taxes?
1 Best answer

Accepted Solutions
bwa
Alumni
Alumni

Can you write off fraud?

A personal casualty loss (including a theft) is deductible if you itemize deductions. The measure of a casualty loss is the fair market value before the casualty, less the fair market value after, less any insurance proceeds. The decrease in market value can be estimated by repair costs that restore the property to it's prior condition.

If deductible, the loss must first be reduced by $100 (in 2009 - $500), and any remainder is deductible to the extent it exceeds 10% of your adjusted gross income. As an example, if your AGI is $50,000 and the personal portion of the loss is $12,000, then the deductible portion in 2010 is $ 6,900 ( $12,000 - $100 - $5,000).

As examples, if your loss is -

--- 500, you have no deductible loss if your adjusted gross income is over $4,000
--- 1,000, you have no deductible loss if your adjusted gross income is over $9,000

Tax topic 515 has more information and links regarding casualty losses, and can be found here: http://www.irs.gov/taxtopics/tc515.html

(From the IRS definition in Tax Topic 515:  "A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration.  A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent. ")

Casualty losses are under the deductions and credits tab under the very last item ("Other Deductions and Credits.")

In the case of a theft, copies of police reports and documentation of how and how much was stolen would be necessary if the loss were questioned by the IRS.

View solution in original post

25 Replies
ptaylor276
New Member

Can you write off fraud?

lost 1900.00 in a scam. Police report was made out- can I claim any of this money?
Richard_T
New Member

Can you write off fraud?

i was scamed out of  130000. in cash last year. i have filed a police report and it was forwarded to the fbi. how  to i clam this loss?
bwa
Alumni
Alumni

Can you write off fraud?

A personal casualty loss (including a theft) is deductible if you itemize deductions. The measure of a casualty loss is the fair market value before the casualty, less the fair market value after, less any insurance proceeds. The decrease in market value can be estimated by repair costs that restore the property to it's prior condition.

If deductible, the loss must first be reduced by $100 (in 2009 - $500), and any remainder is deductible to the extent it exceeds 10% of your adjusted gross income. As an example, if your AGI is $50,000 and the personal portion of the loss is $12,000, then the deductible portion in 2010 is $ 6,900 ( $12,000 - $100 - $5,000).

As examples, if your loss is -

--- 500, you have no deductible loss if your adjusted gross income is over $4,000
--- 1,000, you have no deductible loss if your adjusted gross income is over $9,000

Tax topic 515 has more information and links regarding casualty losses, and can be found here: http://www.irs.gov/taxtopics/tc515.html

(From the IRS definition in Tax Topic 515:  "A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration.  A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent. ")

Casualty losses are under the deductions and credits tab under the very last item ("Other Deductions and Credits.")

In the case of a theft, copies of police reports and documentation of how and how much was stolen would be necessary if the loss were questioned by the IRS.

View solution in original post

bwa
Alumni
Alumni

Can you write off fraud?

Due to percentage limitations on casualty losses have a loss but you would have no tax benefit from it if your adjusted gross income is over $19,000.

cas
Level 1

Can you write off fraud?

I thought the law was changed to say these losses can only be deducted if they occur in a federally declared disaster area. Thoughts?

DoninGA
Level 15

Can you write off fraud?

@cas 

The answers on this thread are for prior tax years before 2018.  When the answers were moved from the TurboTax AnswerXchange to the current TurboTax Community forum the dates on the answers were changed.

 

You are correct that the tax code changes that effect tax years 2018 thru 2025 eliminate this type of loss and can only be deductible if they occur in a federally declared disaster area.

tagteam
Level 15

Can you write off fraud?


@cas wrote:

I thought the law was changed to say these losses can only be deducted if they occur in a federally declared disaster area. Thoughts?


You are correct; the law was changed (the Tax Cuts and Jobs Act (TCJA)). Personal casualty and theft losses of an individual, sustained in a tax year beginning after 2017, are deductible only to the extent they’re attributable to a federally declared disaster. 

 

See https://www.irs.gov/publications/p547#en_US_2018_publink100048767

 

The posts you read (above yours) are old and were transferred here from another TurboTax forum. The dates on the posts are not indicative of when they were made.

bingaware
Level 2

Can you write off fraud?

It is 2020 now, and I read you can no longer write off fraud loss from 2018-2025.

My question is, can we file an amendment for tax year 2020 in 2026?

Got scammed all of my savings, and in a devastating state right now.

 

 

xmasbaby0
Level 15

Can you write off fraud?

@bingaware Casualty losses and theft are not deductible on your federal return under the tax laws that changed for 2018 to 2025.  Sorry. (Only casualty losses in a federal declared disaster area are deductible.  Theft losses are not)

 

You are asking us to predict what the tax laws will be in six years.  No one can predict that.  Congress writes the tax laws.  We cannot predict what they will do for 2026.

 

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

 

But if you were scammed out of a large amount of money, you should file a police report and seek legal advice as to how to recover the funds through the court system.

**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.**
Anonymous
Not applicable

Can you write off fraud?

don't necessarily agree. losses from Ponzi Type schemes are still deductible.  

https://www.cpapracticeadvisor.com/tax-compliance/article/12438704/tax-reform-myths-and-facts-for-20...

from this link

Casualty, theft, and Ponzi scheme losses in connection with a business are still deductible on the federal return on the applicable business schedule. 

 

other law firms have commented that an investment loss from a Ponzi type scheme is still deductible.

also see below for excerpts from the 2019 instructions for form 4684 - Casualties and Thefts.

https://www.lehmantaxlaw.com/has-the-trump-tax-bill-made-business-theft-loss-deductions-and-losses-l...

https://www.lehmantaxlaw.com/are-ponzi-scheme-losses-tax-deductible-in-2018/

 

if you think your loss is from a Ponzi type scheme you should consult a tax professional. not all investment losses may meet the criteria to take a deduction.

 

from 2019 instructions for form 4684 Casualties and Thefts

Note. Victims of fraudulent investment schemes can claim a theft loss deduction if certain conditions apply. See Losses From Ponzi-Type Investment Schemes, later, for more information.

 

Losses From Ponzi-Type
Investment Schemes
The IRS has issued the following guidance to
assist taxpayers who are victims of losses from
Ponzi-type investment schemes.
• Revenue Ruling 2009-9, 2009-14 I.R.B. 735
(available at IRS.gov/IRB/
2009-14_IRB#RR-2009-9).
• Revenue Procedure 2009-20, 2009-14 I.R.B.
749 (available at IRS.gov/IRB/
2009-14_IRB#RP-2009-20).
• Revenue Procedure 2011-58, 2011-50 I.R.B.
849 (available at IRS.gov/IRB/
2011-50_IRB#RP-2011-58).
If you qualify to use Revenue Procedure
2009-20, as modified by Revenue Procedure
2011-58, and choose to follow the procedures
in the guidance, first fill out Section C to
determine the amount to enter on Section B,
line 28. Skip lines 19 to 27. Section C of Form
4684 replaces Appendix A in Revenue
Procedure 2009-20. You don't need to
complete Appendix A.
For more information, see the instructions
for Section C, later, and the above revenue
ruling and revenue procedures.
If you choose not to use the procedures in
Revenue Procedure 2009-20, you may claim

your theft loss by filling out Section B, lines 19
to 39, as appropriate.

 

 

 

bingaware
Level 2

Can you write off fraud?

yeah, did that. the chance for recovering  any loss is close to zero

bingaware
Level 2

Can you write off fraud?

Thanks @Anonymous 

It is not a Ponzi Scheme

It was just fraudulent investment on oil futures. 

The company, the website, the MT4 platform they developed, everything is fake, and manipulable

The bank accounts were scammers' personal accounts

It is a very clever scam developed in Southeast Asia

 

 

jperry5333
New Member

Can you write off fraud?

When I file my 2020 income tax, I want to be sure that I can submit for a review, a $32000 scam that was committed on my bank checking account and line of credit.  I have filed complaints for fraudulent activity with my bank, with no satisfaction to returning the funds.  I have also filed on line forms with the FTC and FBI with no satisfaction as of 12/12/2020.  The FTC is still trying to find the culprits and return some or all of my funds.  I don't hold out any hope.  Can Turbo Tax others explain to me if I can file this loss.  I had to close out $15000 of of investments to cover some of the loss.  I am sure that I will have to pay capital gains tax on this withdrawal.  So I will be getting a "double wammy" for this tragedy.  Hope I hear back with some confident help.  Thank you.

Anonymous
Not applicable

Can you write off fraud?

tax law change effective for the years 2018-2025 bar the deduction for personal casualty losses with a few exceptions.  your description does not seem to apply to any of those.  however, if you would provide more details as to what happened perhaps a different outcome is possible. 

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