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Tax Loss Write-off for Crypto Fraud

Expert Guidance on Tax Deductions for Crypto Scam Victims

At Dimov Associates, we understand the distress and confusion faced by victims of cryptocurrency scams. With an alarming increase in such incidents, we have dedicated our expertise to assisting those who have suffered financial losses ranging from $100,000 to $2 million. Our goal is to help you understand your rights and options for claiming crypto losses on your tax returns.

Understanding Your Options for Deduction:

Victims of crypto scams have several avenues to explore when it comes to tax deductions, depending on their specific situation:

  1. Casualty, Fraud, Embezzlement, or Ponzi Losses: These are considered under specific conditions and might allow for a significant deduction.

  2. Capital Loss Deduction: While the limit for this deduction is typically $3,000, it can be a viable option for some.

  3. Business Loss: In certain cases, losses related to crypto scams can be filed under business losses.

Despite the challenges posed by current tax laws, in many instances, you may be eligible to claim a full or nearly full deduction for your losses.

Key Considerations and Steps:

Our approach involves a thorough assessment of your case to determine the best course of action:

  • Eligibility for Full Deduction: Assessing whether your situation qualifies for a full loss deduction.

  • Qualification Criteria: Understanding the specific requirements needed to qualify for a full deduction.

  • Audit Risk Management: Advising on strategies to minimize audit risk and preparing documentation for defense in case of an audit.

  • Timing of Deductions: Determining the appropriate tax year for claiming the fraud loss.

  • Carryover of Unused Deductions: Exploring options for carrying over any unused deductions when the loss exceeds annual income.

Ready to Assist You

Dimov Associates has successfully assisted numerous taxpayers in claiming substantial deductions for crypto fraud losses. If you find yourself in this unfortunate situation and need expert guidance, please do not hesitate to contact us. Our team is committed to providing you with the support and advice you need to navigate these complex tax issues.

Need help with Tax Loss Write-off for Crypto Fraud?

Call us today at (866) 599-9571, email us at info@dimovtax.com, or fill out the form and we’ll get in touch immediately.

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George Dimov - Founding President of George Dimov CPA and Tax Specialists, an online CPA firm with the highest standards

George Dimov

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FAQs on Tax Loss Write-Off for Crypto Fraud

Yes, cryptocurrency losses are tax deductible. The IRS treats cryptocurrencies as property, so losses from their sale or exchange can offset capital gains and, if losses exceed gains, up to $3,000 of ordinary income annually.

Yes, you can write off crypto losses. These losses can offset capital gains from other investments. If your total capital losses exceed your capital gains, you can deduct up to $3,000 ($1,500 if married filing separately) from your ordinary income each year. Any remaining losses can be carried forward to future tax years.

To claim crypto losses, report each transaction on Form 8949, detailing the date acquired, date sold, proceeds, cost basis, and gain or loss. Summarize these on Schedule D of Form 1040 to calculate your total capital gain or loss. Ensure accurate records of all transactions to support your claims.

No, you cannot write off 100% of stock losses  in a single tax year. You can use capital losses to offset capital gains. If losses exceed gains, you can deduct up to $3,000 ($1,500 if married filing separately) from your ordinary income annually. Excess losses can be carried forward to future tax years.

Failing to report crypto losses means you miss the opportunity to offset gains and reduce taxable income. Additionally, the IRS requires reporting of all cryptocurrency transactions; non-compliance can lead to penalties or audits.

You can use crypto losses to offset capital gains. If your losses exceed your gains, you can deduct up to $3,000 ($1,500 if married filing separately) from your ordinary income each year. Any remaining losses can be carried forward to future tax years.

Generally, personal theft losses are not deductible. The Tax Cuts and Jobs Act of 2017 suspended the deduction for personal casualty and theft losses for tax years 2018 through 2025, except for losses attributable to a federally declared disaster.

Losses from scams are typically considered personal theft losses, which are not deductible for tax years 2018 through 2025, unless related to a federally declared disaster. Therefore, most scam-related losses cannot be written off during this period.