Scam victims can owe taxes on stolen money. A bill in Congress could offer relief
A bill in the House would restore a pre-2018 rule that generally allowed a tax deduction for theft losses and would add other relief for fraud victims.
A proposed bill in Congress aims to provide tax relief to victims of scams and fraud, who may currently be liable for taxes on stolen money. This issue arises because the Tax Cuts and Jobs Act of 2017 suspended the theft loss deduction for individuals from 2018 to 2025, leaving victims with limited recourse. The bill seeks to restore a pre-2018 rule that generally allowed a tax deduction for theft losses.
The implications of this bill are significant for individuals and businesses that fall prey to scams and fraud. Currently, victims may be required to report stolen funds as income, resulting in a tax liability. This can add insult to injury, as victims are already dealing with the financial and emotional aftermath of being scammed. By providing relief, the bill could help alleviate some of the financial burdens faced by victims.
Industry stakeholders should watch the progress of this bill closely, as it could have a direct impact on their customers or clients. If passed, the bill could provide much-needed relief to victims of scams and fraud. What's next to watch is whether the bill gains traction in Congress and if it will be included in any upcoming tax legislation. Additionally, taxpayers who have fallen victim to scams may want to consult with a tax professional to understand their current options and potential future relief.
Originally reported by cnbc.com. Trade-News adds analysis for finance & markets readers.