Fraud victims aren’t just losing money; they’re also facing unexpected tax bills. Changes in tax laws mean many victims can no longer deduct their losses, leaving them with financial hardship on top of being scammed.
So why are fraud victims being taxed on stolen money?
- The 2017 Tax Cuts and Jobs Act eliminated tax deductions for theft losses, unless linked to a federally declared disaster.
- Victims who withdraw retirement savings to cover losses face penalties and taxes, further increasing financial damage.
What Can You Do if You’ve Been Scammed?
Report the fraud – File a complaint with the FTC and local authorities.
Check tax options – If the scam involved investments, you may still qualify for a deduction.
Seek professional advice – A tax expert can help navigate potential relief options.
Fraud is on the rise, with Americans losing over $12.5 billion in 2023—a record high. Many victims, especially older adults, are left struggling. While lawmakers are pushing to restore tax deductions for fraud losses, change is slow.
The bottom line? If you’ve been scammed, act fast, know your rights, and seek help. Until tax laws change, staying informed is your best defense.
