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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29573
Experience:  Taxes, Immigration, Labor Relations
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You have answered that money lost on romance scam is tax

Customer Question

You have answered that money lost on romance scam is tax deductible as casualty and theft loss. My question is can you add IRA early withdraw penalty and additional tax on the loss also?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Unfortunately - that would not be correct interpretation.
IRA distribution may not be classified as a theft.
A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent.
IRA distribution is not illegal and there is no criminal intent here.
However - the victim may partially offset taxable income from IRA distribution by claiming the theft loss.

Expert:  Lev replied 1 year ago.

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