The $3,000 Your Brother Owes You
Yes, in some cases, it is possible to write off a bad personal loan of up to $3,000 on your 1040 form – even one from a family member. But please don’t think the IRS will make it easy. You’ll have to prove there was a promissory note that spells out a repayment plan and a fair interest rate and show you made a good faith effort to collect. (Consider sending that deadbeat sibling an invoice.) You’ll also need to explain why you’ve decided you won’t be repaid. Then again, it might be easier to write off your brother.