Get expert tax and accounting help!
Call (866) 681-2140
Call (866) 681-2140
The tax implications of crypto scams depend on profit motive: whether the money went in to earn a return. We build the crypto scam tax deduction claim, with the evidence behind it, and file it with the return.
Which crypto loss deduction applies
Answer two questions to find the deduction on a US individual return
Deducted in the year the theft is discovered, less any amount still expected back, on Form 4684, Section B
YesDeductible only against personal casualty gains, or for a federal or (from 2026) state declared disaster
No romance or extortion, no investmentOffsets gains, then up to $3,000 of other income a year; the rest carries forward
YesA drop in value counts only after a sale or swap; an abandoned token gives no deduction
No still held or abandoned| Theft loss | Capital loss | |
|---|---|---|
| Loss | $80,000 sent to a fake trading platform | $80,000 lost selling coins below cost |
| Deducted this year | $80,000, with no $3,000 cap | $3,000 against other income |
| Carried forward | None needed | $77,000 to later years |
| Assumes | Single filer who itemizes, income above the loss, no recovery expected. The loss is the money paid in, not the balance the platform showed. | Single filer with no capital gains that year |
We build each crypto scam loss tax deduction around the theft, the profit motive and the year of discovery.
For a stolen crypto tax write off, we trace the money from the bank to the platform wallet. Our forensic accounting team works line by line when records are thin.
We report the crypto scam tax write off on Form 4684, Section B, for income-producing property.
We document why you expected an investment return and track each recovery claim.
Bank wires, card charges and exchange deposit records that show where the money went.
Screenshots of the platform balance, the wallet addresses and the transaction hashes.
Messages with the scammer and any report filed with the police or the FBI Internet Crime Complaint Center (IC3).
Yes, once the crypto is sold or swapped. The IRS treats digital assets as property, so you report a crypto tax loss when you sell below cost and use it against capital gains first.
In a 2023 Chief Counsel memo, the IRS refused a loss on a token that had fallen in value but still traded. You cannot deduct an abandoned token either, since Congress made the suspension of miscellaneous itemized deductions permanent.
For crypto tax loss harvesting, our cryptocurrency tax services team times sales of positions below cost for a year with large gains to offset.
The IRS lets a filer deduct up to $3,000 of net capital loss from other income each year ($1,500 married filing separately) and carry the rest forward.
Source: IRS Topic 409
Smooth, professional, great. George's crypto expertise was impressive!
We price the claim on the number of wallets, exchanges and transactions behind it, and quote a fixed fee before work starts.
When we need to trace the money, our forensic team quotes that work separately, for each year of activity reviewed.
The lightest claim is one platform, one year, with the transfer records in hand. These are the factors, not a quote.
Send the exchange records and transfer history, and a CPA confirms whether a crypto scam tax deduction applies before anything is filed.
