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Reply to "the financial advice columnist who gave $50k in a shoebox to a scammer"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]PSA: Victims of Fraud are no longer able to deduct the loss on their taxes. (Related to the article, she makes mention of this and I hope her CPA was aware of the change because otherwise she’s going to have another problem) The 2017 Trump Era Tax cuts removed ability to offset phishing/fraud on your taxes. There have been multiple stories recently of people who gave their tax deferred accounts to scammers and now owe hundreds of thousands of dollars in taxes to the IRS. [/quote] Someone mentioned this in the comments to the article and the author got really defensive and said she’s writing it off as a casualty loss, not a theft loss. Seems like a bit of a loophole if she’s able to do it. So if I understand, she was planning on paying this $50k to the IRS. Instead, she gives it to scammers. She’s able to deduct the loss from her taxes, thereby lowering her taxes. [b]So if effect, she’s sort of whole, no?[/b][/quote] This reminds me of the old Seinfeld "They just write it off Jerry!" bit. No, if you deduct something, that just means you don't have to pay taxes on that amount, not that the IRS gives it back to you. That would be a refundable tax credit. Based on her story and likely tax bracket, she could probably save 1/3 of that in taxes due, combining federal and state and city. Maybe up to 40% max. So say max $20k she would get back (or more likely not have to pay since she said she is a freelancer paying quarterly taxes) in 2024 (assuming this happened in 2023).[/quote] PP here- this is assuming she could actually deduct the $50k loss. Don't know about the legality if that, seems murky.[/quote]
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