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Crypto Scam

Crypto Scam

Scammers are an unfortunate reality, and many taxpayers experience personal strife and financial losses every year. Crypto con artists are constantly adapting and altering their methods of breaching and hacking your financial data, and those that fall victim end up scratching their heads when tax season approaches. Thankfully, there are laws and regulations put in place to protect consumers and ease the pain of their fiscal losses.

 

Last year, victims of Ponzi Schemes were able to deduct the majority (95%) of their losses on their federal tax returns, so long as the taxpayer had no plans to recoup their losses through third-party services. Those who did plan to recover their losses with the help of a third-party assistant were able to deduct 75% of their unfortunate losses in 2021. Some entities experienced a financial loss that was greater than their taxable income for 2021, and were able to carry over their balance to 2022. This allowance is expected to continue, and the balance should be able to carry over until the total loss is completely claimed. Essentially, what will ultimately happen is you will get your funds back from the federal government through taxes you paid in 2021. The money you gave to the IRS will be distributed back to you, not the funds you lost as a result of a scammer. 

 

Losses due to schemes can be claimed specifically as theft losses, not capital losses.Thankfully, there is no limit for theft losses, unlike the capital loss deduction limit of $3,000. Be advised that claiming such losses does not ensure an audit, but it could happen. In the event of an audit, be prepared with documentation relating to the crime of theft, including bank statements showing losses, police reports, and any information you have on the scammer and their “company.”

 

In summary, you will not receive a full, direct reimbursement of the funds you lost due to a scam. However, depending on the size of your financial loss compared to your income, you will pay little to no taxes on your loss and receive a noteworthy tax return to help rebuild your finances. Scams are a harsh reality, and more and more people fall victim to their tricks each year. The evolution of technology has only helped scammers, and that trend is likely to continue. Luckily, the IRS has put in place protections to prevent further loss and taxation on funds that were illegally seized from your account.

 

Consult a professional tax office like Dimov Tax Specialists to combat and prevent crypto scams from ruining your financial records and obliterating your funds. Dimov tax will help you gather evidence for audits, properly claim your theft losses, and receive the highest refund possible to ease the pain of the crime. Recover successfully with Dimov Tax, or use their services to proactively prevent scams from infiltrating your bank accounts. Protect your assets and react properly to scams with the help and guidance of Dimov Tax! Don’t fight scammers and attempt to recoup losses alone. Let Dimov Tax take a look at your unique situation, and find the best solution for you and your investments!

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