Kalshi taxes

Yes. Kalshi winnings are taxable income in the United States. You owe tax on the profit whether or not a form arrives. Kalshi sends a 1099 for interest and for credits once you pass an IRS threshold, and it gives every trader a yearly profit and loss statement for the trades themselves.

The open question is which kind of income a winning event contract is. The IRS has published nothing that names event contracts, so tax professionals file them three different ways, and each one handles losses differently. This page lays out what Kalshi sends, what the IRS has and has not said, the same trading year under each treatment, and the records to bring to whoever prepares your return. It then covers Polymarket US and polymarket.com.

This is general information, not tax advice. A tax professional who knows your whole return makes the call on classification.

Kalshi taxes at a glance

Are Kalshi winnings taxable

Yes. US tax law starts from the position that income from any source is taxable, and nothing exempts a prediction market. A contract you bought at 40 cents that settles at $1.00 made you 60 cents, less the fee, and that is income in the year the market settled or the year you sold.

Three things on Kalshi create income:

• Trading profit. The gain on contracts you sold or that settled in your favor, net of what you paid.
• Interest. Kalshi pays a variable rate, listed at 3.50% on its help center, on balances of $250 or more for eligible US accounts. It accrues on cash and on open positions.
• Credits and rewards. Referral bonuses, promotional credits and liquidity incentive rewards.

A deposit is not income, and a withdrawal is not a taxable event. Moving $5,000 of your own money in and $5,000 out creates nothing to report. What counts is the profit made while the money was there.

Which tax forms Kalshi sends

Kalshi's help center article on tax documentation lists four forms. Each goes only to members who reach the IRS reporting threshold for that kind of payment.

Read that list carefully, because it corrects the most common belief in the Kalshi tax threads on Reddit. The 1099-B on Kalshi's list covers crypto transfers. Kalshi's article names no 1099 that reports profit on event contracts. For your trades, the document is the profit and loss statement.

• Where to find them: log in, open Account and choose Tax Info. Pick the year and download.
• Delivery: some forms arrive by email from Zenwork, Kalshi's tax form provider, as a secure download link. Check your spam folder.
• No form showing: Kalshi says that usually means you did not reach the threshold. The income is still yours to report.
• Timing of the statement: Kalshi updates profit and loss figures on the first of each month, so a mid-month download leaves out the latest trades. Pull the final copy after the year has closed and the statement has refreshed.

Why Kalshi asks for your Social Security number

Kalshi asks for an SSN for two reasons: identity verification, which it can request at any point after signup as a federally regulated exchange, and tax reporting on interest and credits. Its help center gives the two thresholds in plain numbers.

• Interest: you need an SSN on file to receive more than $10 of interest in a year.
• Incentive credits: you need one to receive more than $600 of credits in a calendar year. Referral and liquidity incentive credits count together.
• Not needed for: depositing, trading, or withdrawing by a non-crypto method.
• No workaround: Kalshi says support cannot bypass the requirement. A credit that fails to post usually posts after you add the number.
• Storage: Kalshi says the number is stored encrypted and kept only for audit and regulatory purposes.

To add it, open Account and security, choose Social Security Number, enter it and save. The $10 interest line arrives faster than people expect: at a 3.50% rate, a balance near $300 held all year crosses it.

What the IRS has and has not said about event contracts

The IRS has published no revenue ruling, notice or FAQ that names prediction markets or event contracts. Its gambling income page lists lotteries, raffles, sports betting, horse races and casinos, and does not mention them. That leaves traders and their preparers to reason from older rules, and three positions are in use.

What each position rests on, and where it is weak:

• Capital gains. The most common position among preparers who handle traders. Almost every Kalshi position lasts under a year, so the gain is short term and taxed at your ordinary rate. The benefit is on the loss side: losing trades net against winning trades without itemizing.
• Section 1256. The 60/40 split is the best rate on offer, and Form 6781 exists to report gains and losses on Section 1256 contracts under the mark-to-market rules. The statute defines which contracts qualify, and no IRS guidance says a binary event contract is one of them. A preparer who takes this position is making an argument, not following a published rule.
• Gambling. The harshest outcome. Winnings are taxed in full, and losses help only if you itemize. No IRS guidance says an exchange-traded event contract is a wager, and none says it is not. Sports contracts draw this argument more than economic or weather contracts do.

Some preparers also report net profit as other income on Schedule 1. Ask yours how losing trades are handled under that approach before you agree to it.

Our read as traders: the classification is the tax professional's decision, and your job is to hand over records clean enough to support any of the three. Pick one method, write down why, and use it every year. Switching methods year to year to chase the better result is the habit that draws questions.

Do Kalshi losses offset wins

Under capital gains or Section 1256 treatment, yes, dollar for dollar. Under gambling treatment, only partly, and only if you itemize.

• Capital treatment. Add every gain and every loss for the year. If the total is a loss, up to $3,000 of it ($1,500 if married filing separately) reduces your other income, and the rest carries forward to later years.
• Gambling treatment. You report the winnings as income. Losses are an itemized deduction on Schedule A, limited under current law to 90% of the losses and never more than the winnings. A trader who takes the standard deduction gets no benefit from losses at all, and a net losing year creates no deduction against a salary and nothing to carry forward.
• Fees. Kalshi's profit and loss statement already includes trading fees and rebates, so the fee on each fill reduces your gain or adds to your loss. The formula for every price sits in Kalshi fees explained.

The same year under each treatment

Take a trader whose winning positions made $12,000 and whose losing positions lost $9,000, fees included. The economic result is a $3,000 profit. The amount that reaches the return changes with the label.

Now a losing year: winning positions made $5,000, losing positions lost $9,000, a $4,000 net loss.

The spread between the best and worst row in each table is the reason to settle the classification with a professional before you file, and the reason active traders keep every fill.

How Kalshi computes your profit

Kalshi's statement uses first in first out. When you sell part of a position, Kalshi matches the sale against the oldest contracts you bought.

A single position works the same way. Buy 100 Yes at 40 cents as a taker and you pay $40 plus a $1.68 fee. If the market settles Yes you receive $100, and the statement shows a gain of $58.32. If it settles No, the statement shows a loss of $41.68.

A position still open on December 31 has no sale and no settlement yet. Under capital treatment it belongs to the year it closes. Section 1256 treatment marks open positions to market at year end, which is one more reason the method has to be chosen once and kept.

Records to keep

The IRS asks anyone reporting this kind of income to keep records that show both winnings and losses. On Kalshi that means:

1. The yearly profit and loss statement from Account, Tax Info, downloaded after the January refresh.
2. Every 1099 Kalshi or its providers issued you.
3. Your full trade history: market, side, contracts, price, fee and time for each fill.
4. Settlement results for every market you held to the end.
5. Deposit and withdrawal records, to show which money was yours going in.
6. For crypto deposits or withdrawals, the coin, the amount, the date and the dollar value that day.
7. Interest payments and credits received, by month.

Rivo helps with the trading side of this list. Its portfolio shows your positions, your orders and your copy history on each connected venue, and every bot keeps its own record of the trades it placed and the ones it skipped. Rivo does not produce tax forms or tax reports. The statement your preparer needs comes from Kalshi.

State taxes on Kalshi winnings

Most states with an income tax start from your federal income, so Kalshi profit flows into the state return too. States do not all follow the federal rules for gambling losses, which means the gambling label can cost more on the state return than on the federal one. A few states have no income tax on wages or trading profit at all. Check your own state with your preparer. Whether you can open a Kalshi account in your state is a separate question, answered on the prediction market access map.

Polymarket US taxes

Polymarket US profit is taxable the same way Kalshi profit is. Polymarket US is a CFTC-designated contract market run by QCX LLC, it holds balances in dollars, and the same three classifications apply to its contracts.

• Forms: the Polymarket US documentation has no tax forms page. Ask its support what it will issue for your account before you file.
• Records: its documentation describes downloadable trade, execution, position and fee reports, plus a ledger of every cash balance change.
• Rewards: Polymarket US runs volume, liquidity and referral incentive programs. Rewards are income separate from trading profit.
• Fees: the taker fee and maker rebate change your gain on every fill. See Polymarket fees explained.

Polymarket.com taxes

A US taxpayer owes tax on polymarket.com profit, and crypto adds a second layer. Balances on polymarket.com sit in pUSD, a Polygon token backed one to one by USDC. The IRS treats digital assets as property and lists stablecoins among them.

• The position: profit or loss on the outcome shares, measured in dollars on the day you bought and the day you sold or redeemed.
• The tokens: swapping another coin into your Polymarket balance, or selling USDC for dollars on an exchange after a withdrawal, is its own disposal of a digital asset. A stablecoin trades near $1, so the gain is usually small, but the event still counts.
• The Form 1040 question: every return asks whether you received, sold or exchanged a digital asset during the year. Activity on polymarket.com is the kind of activity that question asks about.
• Forms: the polymarket.com documentation has no tax forms page. An exchange you used to buy or sell the crypto may issue its own form for that leg.
• Records: wallet activity lists trades, redemptions, rewards, maker and taker rebates, deposits and withdrawals. Every transaction is also on the public chain under your wallet address.

polymarket.com does not open new positions for US users, so most of its traders live elsewhere and follow their own country's rules. The steps for cashing out are in how to withdraw from Polymarket, and the status of each product is in is Polymarket legal in the US.

What to bring to a tax professional

Bring documents and questions, in that order. A preparer who has never seen an event contract can still do good work from a clean file.

1. The Kalshi profit and loss statement and every 1099, for each year in question.
2. The full trade export from each venue you used.
3. A one-page summary: total gains, total losses, total fees, interest, credits and rewards, per venue.
4. A list of positions open on December 31 with their cost.
5. For polymarket.com, your wallet address and the exchange records for every crypto purchase and sale.
6. A short description of what you trade: sports, economics, politics, crypto or weather contracts.

Then ask these:

• Which classification will you use for my event contracts, and what is it based on?
• Does the answer change for my sports contracts?
• How will my losing trades be treated, and do I need to itemize for them to count?
• Do the wash sale rules apply to contracts I sold at a loss and bought back?
• Should I make estimated tax payments after a large winning quarter?
• How does my state treat this income and these losses?
• If the IRS publishes guidance later, what happens to the years I already filed?

Where Rivo fits

Rivo is the prediction market terminal for Kalshi, Polymarket, Polymarket US and Gemini, at $9 a week or $15 a month. It never holds your money. Every dollar stays in your own venue account, and each venue remains the source of your tax documents.

• One portfolio. Positions, orders and copy history for each connected venue in one place, so you know what you hold on every venue before the year closes.
• The fee before you trade. The order ticket shows the venue's exact fee and your average fill before you click Buy, the same numbers that later land in your profit and loss statement.
• A record for every bot. Each bot lists the trades it placed and the ones it skipped with the reason, which makes a year of automated trading easy to reconcile against the venue's statement.
• Research worth the paperwork. The Kalshi leaderboard ranks traders on settled markets, and you can copy one with a bot from the bot builder.

New to the venue? Start with how does Kalshi work, then read how to withdraw from Kalshi for the rules on getting paid.

Frequently asked questions