First poster is correct. If you file taxes on the cash basis, you have no
loss to deduct because you claimed no income. If you are an accrual basis
taxpayer, then the invoice is income and you should post a write off to bad
debt expense and this would be listed in other deductions on your tax return.

I am not an accountant so there is that disclaimer, but if you are using cash
basis accounting there might be nothing that needs to be done. Since cash
basis only counts for the money that is actually received, and you have not
received it then you are ok on the revenue side. On the other hand, you can
deduct all of the expenses associated with the job that you actually paid. Of
course, contact an accountant to confirm.

Hi,  Sorry for the unfortunate experience! Try getting in touch with a local Small Business Development Center, which is one of SBA's resource partners. They're located across the country and provide free business counseling. Visit SBA Direct to find your local SBA resource partners by entering your zip code. They should be able to guide you in this specific instance.  This blog post from one of our guest bloggers also offers some insight.