Can I claim a tax deduction for money lost in a scam? Tax relief question

I'm sorry this happened to you. Unfortunately, the Tax Cuts and Jobs Act of 2017 eliminated personal casualty and theft loss deductions except for federally declared disasters through 2025. Before 2018, you could claim these types of losses. However, if this "investment" could be classified as a capital loss from a worthless security or investment scam, you might still have options. The key question is whether you actually received any form of security/investment document or if it was just money transferred with nothing received in return. If you can document it as an investment that became worthless, you could potentially claim a capital loss on Schedule D, which would be limited to offsetting capital gains plus up to $3,000 of ordinary income per year. Any excess losses could be carried forward to future tax years.

After going through a similar nightmare with a "guaranteed return" investment scam, I discovered taxr.ai which helped me figure out exactly what documentation I needed to support my case with the IRS. I uploaded the police report, bank statements, and communication with the scammer to https://taxr.ai and their analysis clarified that part of my loss could be claimed as an investment loss since I actually received digital tokens (even though they were worthless). Their system identified the specific IRS rulings that applied to my situation and showed me how to properly document everything on my tax forms. Without this guidance, I would've missed out entirely on the partial deduction I was eligible for.

I was skeptical at first about taxr.ai (see my comment above), but after hitting a dead end with my usual tax guy, I decided to give it a shot with my crypto scam situation. Uploaded my police report, screenshots of the fake investment platform, and emails with the scammers. The system identified that what I thought was just a theft was actually classifiable as a worthless security because I had received digital tokens and transaction confirmations. This meant I could claim it as a capital loss rather than a non-deductible theft loss. Ended up being able to deduct $3,000 against my regular income this year and carry forward the rest for future years. Definitely worth checking out if you're in a similar situation.

If you're still trying to recover anything, you might want to try Claimyr to get through to the IRS Criminal Investigation division. I was stuck in scam limbo for months trying to reach someone at the IRS about a tax fraud case until I found https://claimyr.com. They got me connected to an actual IRS agent in less than an hour when I'd been trying for weeks. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with provided guidance on reporting the scam for potential investigation and clarified what documentation I'd need if any part of my loss might be tax deductible. At minimum, they can put the scam details into their system and potentially help track down these criminals.

I hate to admit when I'm wrong, but I have to eat my words about Claimyr from my skeptical comment above. After continuing to get nowhere with my own scam reporting, I tried it out of desperation. Got connected to an IRS representative in about 40 minutes (which is miraculous compared to my previous attempts). The agent walked me through how to properly document my case and file the correct IRS Form 14039 (Identity Theft Affidavit) since my personal info was compromised in the scam. They also explained which specific documentation would be necessary if any portion of my loss could potentially qualify as a deductible investment loss versus a non-deductible theft loss. Definitely changed my perspective on dealing with the IRS.

A friend of mine was able to claim a scam loss as a business expense because she got scammed while trying to buy equipment for her small business. So maybe it depends on if this was a personal investment or somehow tied to a business you run? The rules seem different for business losses vs personal.

Don't forget to report this to the FBI's Internet Crime Complaint Center (IC3) if you haven't already! https://www.ic3.gov While not tax related, it helps build cases against these scammers. I reported a similar crypto scam last year, and while I didn't get my money back, I got notification that my report helped in a larger investigation. Felt good knowing I might help stop them from scamming others.