According to newsday.com, many Ponzi Scheme victims will now be able to write off their financial losses under their state itemized tax deductions. New York will allow victims to claim such loses as a “theft” deduction. New York State is merely following the Internal Revenue Service’s (IRS) lead. In March, the IRS issued a statement saying that investors can claim their financial losses as theft. This allows the investor higher deductions than capital, personal theft and personal casualty loss.
New York state officials have also stated that individuals who have already filed their 2008 state tax returns can amend their returns.
However, individuals should know that New York tax laws do limit how much can be written off. According to newsday.com, “itemized deductions are reduced by up to 25 percent for individuals who make more than $100,000 in adjusted gross income, and for married taxpayers with more than $200,000 in adjusted gross income. Further, “it’s reduced by up to 50 percent for all filers making more than $475,000 in adjusted gross income,” says Ellen Yan of newsday.com. However, those with an adjusted gross income of more than $1 million will not be able to make non-charitable itemized deductions, which includes theft deductions.
This should come as some relief for investors who have lost money as a result of a ponzi scheme. Most notably in New York this shall aid those who are victims of the Bernie Madoff investment scam.
In addition to tax relief, victims of investment fraud may have legal claims which could provide further financial relief and/or recovery. If you believe that you are a victim of investment fraud, please do not hesitate to contact our firm. We provide free legal consultations. Additionally, please visit our website www.dossfirm.com for further information with regard to investment fraud.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.