How to Document a Scam Loss for Your Tax Return

If you are planning to claim a scam loss on your tax return, documentation is everything. The IRS does not simply take your word for it. You need organized, thorough records that prove the theft occurred, show exactly how much you lost, and demonstrate that you have no reasonable prospect of recovery. The good news is that building this documentation file is something you can start today, even if the scam happened months ago.

This guide walks you through every document you need, where to get it, and how to organize it for your CPA and the IRS.

Step 1: File a Police Report

A police report is the single most important document for establishing that a theft occurred. Even if the police cannot investigate your case — and with many scams, especially those involving overseas criminals, they often cannot — the report itself creates an official record that a crime was committed.

Contact your local police department and file a report as soon as possible. When you file, provide as much detail as you can: the dates, the amounts sent, the method of payment, any names or phone numbers the scammer used, and how the scam unfolded. Ask for a copy of the report and the case number. Keep both in your documentation file.

If your local police department is reluctant to take the report, be persistent. You have the right to file a report, and you need it for your tax documentation. Some departments allow online reporting for fraud cases, which can be easier.

Step 2: Gather Bank and Financial Statements

You need documentation showing exactly how much money left your accounts and where it went. Gather the following:

• Bank statements showing the withdrawals, wire transfers, or other transactions related to the scam. Highlight or annotate the specific transactions.
• Wire transfer confirmations from your bank showing the recipient details, amounts, and dates.
• Credit card statements if you paid the scammer with a credit card.
• Cryptocurrency transaction records showing wallet addresses, transaction hashes, amounts, and dates. If you used an exchange, download your transaction history.
• Gift card receipts if you purchased gift cards as part of the scam. Keep the physical cards as well.
• Payment app records from Zelle, Venmo, Cash App, or similar services showing the transfers.

Contact your bank or financial institution if you need copies of older statements. Most institutions keep records for at least seven years and can provide them upon request.

Step 3: Save All Communication Records

The messages, emails, and call logs between you and the scammer tell the story of how the fraud unfolded. This evidence helps establish that a scam occurred and can be important if the IRS questions your claim.

• Text messages and messaging app conversations. Take screenshots that show dates, times, and phone numbers. Save them in chronological order.
• Emails. Save the full emails including headers if possible. Print them to PDF for your records.
• Phone call logs. Your phone company can provide records of calls made and received.
• Social media messages. If the scam involved social media, screenshot all relevant conversations before the scammer deletes their account.
• Websites. If the scammer used a fake website, take screenshots or use the Wayback Machine to capture it before it goes offline.

Step 4: File Reports With Federal Agencies

Filing reports with federal agencies creates additional official records and may also help law enforcement build cases against scam operations. File reports with the following:

• FTC (Federal Trade Commission). File at reportfraud.ftc.gov. The FTC maintains a database of fraud reports and shares information with law enforcement. Save your confirmation number.
• IC3 (Internet Crime Complaint Center). File at ic3.gov if the scam involved the internet in any way. IC3 is run by the FBI and tracks internet-based fraud. Save your complaint number.
• State Attorney General. Many states have consumer protection divisions that accept fraud complaints. File with your state as well.

Each of these reports serves as independent verification that you reported a crime, which strengthens your tax documentation significantly.

Step 5: Organize Your Timeline

Create a written timeline of events from beginning to end. Start with the first contact from the scammer and end with your discovery that it was a scam. Include dates, amounts, and key events. This timeline helps your CPA understand the full picture and helps the IRS see that your claim is well-documented and legitimate.

Your timeline should include when you first had contact with the scammer, each payment you made and the date, when you began to suspect something was wrong, when you confirmed it was a scam, and when you filed reports with police and federal agencies.

Step 6: Understand IRS Form 4684

IRS Form 4684, Casualties and Thefts, is the form you will use to report your theft loss. Section A is for personal-use property losses, and Section B is for business and income-producing property. Your CPA will fill this out as part of your tax return, but understanding what it asks for will help you prepare your documentation.

Form 4684 requires you to describe the property stolen (in this case, money), provide the date of the theft, the date you discovered it, the amount of the loss, and any insurance or other reimbursement you received. It also calculates the deductible amount based on the applicable rules and thresholds.

Step 7: Work With a CPA Who Understands Fraud Losses

Once you have gathered your documentation, the next step is to work with a tax professional who has specific experience with scam and fraud losses. Not every CPA is familiar with the nuances of Section 165, the TCJA exceptions, or IRS Form 4684 as it applies to theft losses. You want someone who has handled these cases before.

The CPAs at ScamTaxHelp.com specialize in exactly this type of work. They offer free initial consultations where they review your situation, assess what deductions you may qualify for, and explain next steps. Having your documentation organized before the consultation will make the process faster and more productive.