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My total TSP account was emptied by an identity theft and I…

My total TSP account...

My total TSP account was emptied by an identity theft and I need to know how to report the transaction. TSP sent a 1099R showing a total withdrawal and reported the withholding to the IRS. Since I did not request the withdrawal or took position of the money, should it be reported as income on a 1099R? How do I get the amount that is reported as withheld from the IRS? I appreciate any assistance you can provide..

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

The money was taken in Dec. 2017. Part of it was retrieved in Feb. 2018..I've lost about 10k. I believe the loss should be reported in 2018's return.

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Answered in 7 minutes by:
3/13/2018
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,867
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

Hi. My name is ***** ***** I will be happy to help you.

Have you report the theft to the TSP account administrator?

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Customer reply replied 4 months ago
they retrieved 91%.

Ok. So did you received what they retrieved?

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Customer reply replied 4 months ago
No text is ok

So you did not receive anything from what they retrieved?

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Customer reply replied 4 months ago
The total is 91%.
I belive the 9% will be a loss next year.
Customer reply replied 4 months ago
My belief is that I did d not authorized the withral nor received it, I shower LD not pay any taxes.
Customer reply replied 4 months ago
Thank you. I'll be waiting for the response.

You cannot deduct loss of money that were not previously taxed. If your 1099R reports only what you actually received for tax purposes there's no loss. Taxes withheld will be credited against your tax liability when you file your return just like any other withholding.

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Customer reply replied 4 months ago
No thank you. I did not receive anything. What they retrieved was put back into the TSP acct.

Ok, so what they are reporting on 1099R? Just the withholding?

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Customer reply replied 4 months ago
The 1099R has the total amount that was in the acct as gross distribution. The tax on the distribution was shown as withheld. I dnot really appreciate years ur patience.
Customer reply replied 4 months ago
At the time the withdrawal was made, accounting didn't know the acct was hacked.

You have to go back to the financial institution and request corrected 1099R. What was withheld and already transmitted to the IRS can only be credited against your tax liability when you file your tax return. But you cannot claim loses on money that were never taxed (money from pretax your retirement account). You can blame the investment company for lack of security and sue them for the stolen balance but that between you and the financial institution. You will not be able to recover any loses through tax deduction.

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Customer reply replied 4 months ago
Thank you for all your excellent analysis based on insufficient information. I already made an attempt to get a revised 1099R. However, this a govt agency. Thanks
Mark Anderson
Mark Anderson, Tax Attorney
Category: Tax
Satisfied Customers: 757
Experience: Tax attorney and accountant
Verified

It should be report as a theft loss:

https://www.journalofaccountancy.com/news/2009/jun/defraudedinvestors.html

Mark Anderson
Mark Anderson, Tax Attorney
Category: Tax
Satisfied Customers: 757
Experience: Tax attorney and accountant
Verified
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