How do I report a loss due to fraud?

January 07, 2015 by Dave Du Val, EA
Tax scammer

Hey Dave,

I need help on what form to file with the IRS for 2014 for a fraud case where I lost lots of money. The fraud case was adjudicated and the offender now sits in Fed Prison.

Ralph

 

Ralph,

We are sorry to hear about your loss, but happy to hear that justice has been served in this situation.

First, you need to verify that the loss is deductible in 2014. Generally, theft losses, including fraud cases, are deductible in the later of the year the theft (or fraud) was discovered or the year that the reimbursement amount, if any, can be reasonably determined, or the year it is determined that no reimbursement will be received.

Losses by fraud are considered a theft, and are claimed on Form 4684 Casualties and Thefts. More information is available here.

If the fraud was considered to be a Ponzi scheme, specific rules apply to these losses and you can find more information about this here.

Deductibly Yours,

Dave

Recent Articles

Tax Audit written on financial paper
A tax professional spends four to ten or more hours per audit - think of the time and stress you could save yourself if you purchase pre-paid audit defense.
1040 tax return with Passport and $100 bill
If certified by the IRS to have seriously delinquent tax debt, the U.S. State Department can deny passport applications or revoke currently active passports.
Tax Professional holding up a Calculator
Full Audit Representation through an Audit Defense Membership, is included at no additional cost. Other tax experts charge roughly $150/hour for representation.
people running on treadmills in a gym
The most likely answer for most people would be no, as the general rule is that you cannot deduct the cost of the gym membership. However, there are exceptions.

SEARCH

 

David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

Recent Articles

Tax Audit written on financial paper
A tax professional spends four to ten or more hours per audit - think of the time and stress you could save yourself if you purchase pre-paid audit defense.
1040 tax return with Passport and $100 bill
If certified by the IRS to have seriously delinquent tax debt, the U.S. State Department can deny passport applications or revoke currently active passports.
Tax Professional holding up a Calculator
Full Audit Representation through an Audit Defense Membership, is included at no additional cost. Other tax experts charge roughly $150/hour for representation.
people running on treadmills in a gym
The most likely answer for most people would be no, as the general rule is that you cannot deduct the cost of the gym membership. However, there are exceptions.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.