Is Money Lost In A Scam Tax Deductible

Wherever there is money, there are those who are looking to scam you out of that money. From telemarketing scams, to phishing scams, to everything in between, we always have to exist aware of those who don't have our best interest in heed.

While there is plenty of educational activity out there, some people even so get swindled. And with good reason: scammers are constantly making their pitch and their game ameliorate. So what happens if y'all get taken advantage of? Assuming y'all get through the proper methods and you can't recover your lost greenbacks, can you write off the losses on your taxes? Your auditor in Billings, Montana explains how it works.

Can I Write Off Lost Money?

The short answer is: yep. But in that location is a trivial more to it that just writing off the loss as a whole; there are some complicated calculations that go into it. Hither's the formula:

Off-white Market place Value minus Decreased in Marketplace Value (or $100) minus 10% of your Income.

And then how does that look? Let's suppose you accept an adapted gross income of $50,000. You are swindled out of $10,000. Since the decrease in market value is 100% you utilise the $100 value. Therefore $10,000 – $100 – $5,000 = $4,900. You tin write off $4,900 of your lost money.

Let'south look at this another way. Suppose you take a $10,000 particular sitting in your driveway. The neighborhood kids come by and nail it all upwards leaving it with a flake value of $2,000. Your insurance declines to cover it for whatever reason, and so at present you're sitting on a loss. Fair Marketplace Value ($10,000) – Decreased Market Value ($2,000) – 10% of your income ($5,000) leaves you with an amount of $iii,000 that you tin write off.

At present to take it a step further, in case you are audited y'all need to brand sure that you have reported the theft or loss to the police. Without a police force study, you have no proof that a loss really occurred.

Take Your Accountant in Billings, Montana Figure it Out

Sound complicated? Information technology is. The IRS likes to make things complicated to reduce fraud. Too many people would be claiming all sorts of losses if it were easier; such as "I dropped $5 while buying ice foam the other day." Yous can read up on Topic 515 on the IRS website.

Instead of trying to figure it all out, just bring that information in with the rest of your taxes. As your accountant in Billings, Montana prepares your tax return, he can determine what, if whatsoever, of your loss can be written off your tax return.

Practical Taxes is a full service bookkeeping firm in Billings, Montana. If you lot have already filed your taxation return this year, that's great! Nosotros offer so much more than just tax preparation including a whole lineup of business concern services like payroll and consulting. Call united states today at 406-894-2050. to learn more.

Source: https://practicaltaxes.com/2015/03/20/can-you-write-off-money-you-lost-in-a-scam/

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