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Can I deduct a scam loss on my taxes?

Reviewed by Michael V Porpora, EA, independent Enrolled Agent, New Windsor, NY. EA no. 00140373.Last checked November 2, 2026

How we check this page

Larkspire, Inc. writes this page and builds each tax package. Michael V Porpora checks them as an independent Enrolled Agent, licensed by the U.S. Treasury to represent taxpayers before the IRS. He is paid the same whether he approves a file or not, and he is also an investor in Larkspire, Inc. "Last checked" is the date of his latest review.

The short answer

Often, yes, if it was an investment scam. Since a March 2025 IRS memo, money lost to a scam where you were tricked into investing, or into moving money to "keep it safe", can count as a theft loss you deduct. Romance scams and money sent to help someone usually don't count, yet. You claim it for the year you found out, and you can usually amend a return up to 3 years back.

Today

  1. Check if your loss may count

    The free Tax Check takes about a minute. No name or email needed.

  2. Keep every record

    Each payment, the platform or person, and what you were told.

  3. Report it if you haven't

    File at ic3.gov. A report on file also helps show it was theft.

Found out in 2023 or later? You may still be in time. Check your loss for free in about a minute, no name or email needed. Check my loss

Which scams count

The IRS memo walks through five common scams. The losses it says can count:

  • Fake investments, including crypto and trading apps that show a balance you can't withdraw.
  • "Your money isn't safe" scams, where someone posing as your bank, a tech company or a government agency told you to move your money.
  • Phishing, where someone got into your account and took the money.

What it says usually doesn't count under today's law:

  • Romance scams, and money sent as gifts, loans or "medical bills".
  • Fake emergencies, like a relative supposedly in trouble.

Many cases are a mix. A romance that turns into a fake investment can count for the investment part.

When to claim it

The loss belongs to the year you found out it was a theft. If you're still trying to get money back and there's a real chance of it, you may have to wait until that's settled, and claim what's left.

Found out in 2023, 2024 or 2025? You can usually amend that year's return up to 3 years after you filed it.

What it can be worth

It depends on your income and your tax rate that year. The loss is claimed as an itemized deduction, so it usually helps most when the loss is large. It can also lower the tax on money you took out of an IRA or 401(k) to send to the scammers. If the loss is bigger than your income, part of it may carry to later years.

What you need

  • Every payment: date, amount, how you paid, and where it went.
  • What you were promised, in the messages or emails.
  • Anything that came back to you.
  • A police or ic3.gov report, if you have one.

Congress may change this

A bill passed the House in September 2026 and now sits with the Senate. If it becomes law, romance and impersonation losses could count too, back to 2021. Join the list on larkspiretax.com and we'll tell you if it passes.

Watch out for tax "help" that's another scam

Walk away from anyone who charges a share of your refund, wants your refund sent to their account, won't sign the return with their own tax ID, or promises a big refund before seeing your records. No one can speed up the IRS for a fee.

If a scammer has your Social Security number, get an IRS Identity Protection PIN at irs.gov/ippin. It helps stop anyone filing a return in your name.

Where we help

Your own tax preparer can claim the loss. Many haven't done one before, so we build the file they need: every payment, the timeline, and the numbers. An independent, licensed Enrolled Agent checks it. Your preparer files the return, and your refund goes to your own account. One fixed price, set in writing before any work.

Does your loss count?

Check it for free. About a minute. No name or email needed.

Check my loss

From Larkspire, Inc. General information, not tax advice. Source: IRS Office of Chief Counsel memo 202511015 (March 2025), as the IRS Taxpayer Advocate explains it.