How Kalshi and Polymarket winnings are taxed, what forms to expect, and how to keep records the IRS will accept.
Yes. Kalshi event contracts are taxed under IRC Section 1256 — 60% long-term / 40% short-term capital gains — regardless of how long you held. Kalshi issues a 1099-B.
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Kalshi event contracts are taxed as Section 1256 contracts: 60% long-term / 40% short-term capital gains, regardless of how long you held. You'll receive a 1099-B at year end.
Polymarket is now CFTC-licensed in the US but settles in USDC. Treatment varies — many CPAs still report gains as ordinary income pending clearer 1099 guidance. Confirm with a tax pro.
This is general information, not tax advice. Talk to a CPA who handles crypto.
For every position: market name, entry price, exit price, contracts, fees, and timestamps. Export Kalshi's activity CSV monthly. For Polymarket, save transaction hashes — they're the audit trail.
Most states follow federal treatment for Section 1256 gains. A handful (NY, CA) have additional reporting for crypto-denominated activity. Check your state's guidance before April.
Yes. Kalshi event contracts are taxed under IRC Section 1256 — 60% long-term / 40% short-term capital gains — regardless of how long you held. Kalshi issues a 1099-B.
Because Polymarket settles in USDC, treatment is still evolving. Many CPAs report gains as ordinary income today; some argue for Section 1256 given the CFTC license. Get advice from a crypto-savvy CPA.
Yes — Kalshi issues a 1099-B for the tax year in early spring, similar to a broker.
Yes. All capital gains are technically reportable, no matter the amount. The 1099-B threshold doesn't change your reporting obligation.
Section 1256 losses on Kalshi can offset other Section 1256 gains and carry back three years via Form 6781. Polymarket losses generally follow crypto capital-loss rules.
Catie has spent 15 years covering iGaming, sports betting, and now prediction markets — first as a trade reporter, later as head of editorial at two major industry publications. She has tested every regulated US event exchange since Kalshi's 2021 launch and writes the bulk of PredictionWins' platform reviews and tax explainers.
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