Submitted By: Chuna
Answered: September 30, 2016 9:28 am

I loaned money to a scammer and can’t get my money back. Can I deduct this?

If you made a nonbusiness loan to someone and the loan is completely worthless, you can take a nonbusiness bad debt deduction. A nonbusiness bad debt is treated as a short-term capital loss. A business bad debt is an ordinary loss. A loan to a friend or made for investment purposes is a nonbusiness bad debt, not a business bad debt.

If, however, you can show that your money was obtained by fraud or similar action that constitutes a crime under state law, you can treat it as a theft loss if you itemize deductions. Theft losses involving a personal transaction (not investment or business) are subject to two reductions: $100 per occurrence during the year and 10% of adjusted gross income for all casualty and theft losses in the year.

Tax Glossary

High deductible health plan (HDHP)

For 2007, a high deductible health plan is a health plan with an annual deductible that is not less than $1,100 for self-only coverage or $2,200 for family coverage, and with annual out-of-pocket expenses that do not exceed $5,600 or $11,200, respectively.

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