The term Romance Scam refers to a tactic in which a criminal uses a false online identity to gain their victims’ trust and affection. The scammer then proceeds to manipulate and steal from the victim by taking advantage of the faked relationship.
If you discovered that you’ve been a victim of a romance scam, you may be considering a theft loss deduction.
However, there are several notes to consider:
🔹 The TCJ Act of 2017 has eliminated this deduction for the years of 2018 – 2025. Personal casualty and theft losses beginning after 2017 are deductible only to the extent that the losses are attributable to a federally declared disaster.
🔹 Carryback of theft losses has been eliminated by the same Act: Sec. 172(b)(1)(A) has been amended to provide that there is no carryback for losses discovered after 2017.
There is no option that allows to deduct romance scam losses on Federal tax return at this time.
For NYS purposes:
🔹 Theft losses can be deducted in the year of discovery. It is a taxpayer’s responsibility to provide proof of the fraud: police report, international transfer receipts, e-mail conversations in which the #scammers are soliciting money.
