You would claim the loss one time in the year that the debt becomes worthless and treat as a short-term capital loss.
To deduct in TurboTax, type 'bad debt, non business' in the Find box of your program, then select the 'jump to' link. On the landing page, select 'Yes' then 'No' to the 1099-B question. Select 'Uncollectible Debt on the next page.
See also IRS and TurboTaxHelenaC's answer below.
You would claim the loss one time in the year that the debt becomes worthless and treat as a short-term capital loss.
To deduct in TurboTax, type 'bad debt, non business' in the Find box of your program, then select the 'jump to' link. On the landing page, select 'Yes' then 'No' to the 1099-B question. Select 'Uncollectible Debt on the next page.
See also IRS and TurboTaxHelenaC's answer below.
How do I claim a loss on an unpaid personal loan?
Personal loans don't normally qualify but maybe yours does. From Topic No. 453, Bad Debt Deduction:
If someone owes you money that you can't collect, you may have a bad debt. For a discussion of what constitutes a valid debt, refer to Publication 550, Investment Income and Expenses and Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C). Generally, to deduct a bad debt, you must have previously included the amount in your income or loaned out your cash. If you're a cash method taxpayer (most individuals are), you generally can't take a bad debt deduction for unpaid salaries, wages, rents, fees, interests, dividends, and similar items of taxable income. For a bad debt, you must show that at the time of the transaction you intended to make a loan and not a gift.