Kalshi and Polymarket taxes: which 1099 do you get, and how are profits taxed?
By the W2gMatch team · Sources checked 09-06-2026 · General information, not tax advice.
Profits from event contracts on Kalshi or Polymarket are taxable income whether or not you receive a tax form. Kalshi issues 1099-MISC for rewards, 1099-INT for interest, and 1099-B or 1099-DA for certain crypto transactions, but no form for contract gains. The IRS has not said whether contracts are gambling, capital assets or Section 1256 contracts.
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What Kalshi sends, and what it does not
Kalshi's help center lists the forms it provides: Form 1099-INT for interest paid on cash balances, Form 1099-MISC for credits and rewards, Form 1099-B for broker transaction proceeds from crypto transfers, and Form 1099-DA for digital asset transactions reported through its custodian. [1] It does not list a form that reports gains or losses on event contracts (a contract that pays a fixed amount if a specified event happens, traded on a prediction market). Instead it offers a profit and loss statement, computed first-in-first-out and inclusive of fees and rebates, updated on the first of each month. [1] Kalshi also says it cannot give members tax advice. [1]
A missing form is not a missing obligation. Gambling winnings and other income are taxable whether or not a form is issued. [2]
The open question: what kind of income is it?
The IRS has not published guidance on how gains and losses from event contracts are characterized. Three positions are argued by practitioners, and they lead to different returns:
- Wagering. Gains are gambling winnings; losses are wagering losses, deductible only by itemizing, only to the extent of gains and, from tax year 2026, only 90% of them. [3] This is the treatment that follows if a contract on an election or a game outcome is a bet.
- Capital asset. Contracts bought and sold are property; gains and losses are capital, with the ordinary capital loss limits.
- Section 1256 contract. Kalshi contracts trade on a federally regulated exchange, and some argue the mark-to-market regime for regulated futures contracts applies.
Which position a return takes changes the deduction available for a losing year and the rate on a winning one. Nothing on this page settles it, and a preparer should be told which markets you traded and shown the contract-level history before choosing.
Polymarket and offshore platforms
Polymarket trades are settled in cryptocurrency on a platform that has not historically issued U.S. tax forms. The trades are still taxable, and each crypto movement in and out of a position may itself be a digital asset transaction with its own reporting. Records have to come from the wallet and the platform's own history; there will be no statement waiting in January.
What to keep regardless of the answer
Contract-level records: the market, the date opened and closed, the price paid and received, fees, and the resolution. Kalshi's PnL statement and trade history export cover its markets; the same fields need to be reconstructed for anything traded elsewhere. Whichever characterization the return uses, the substantiation is the same, and the session log fields apply with the market in place of the casino.
Related questions
Kalshi shows no 1099 in my account. Do I owe tax?
Yes, if you had net gains. Kalshi says a missing form usually means an IRS threshold was not met for that form, and it provides no form for event contract gains at all. Its PnL statement is the record to use.
Are prediction market losses deductible?
It depends on how the gains are characterized, which the IRS has not addressed. Treated as wagering, losses are an itemized deduction limited to gains and to 90% from 2026. Treated as capital, the capital loss rules apply.
What 1099 forms does Kalshi issue to users?
Kalshi issues Form 1099-INT for interest payments, Form 1099-MISC for credits and rewards, Form 1099-B for broker transaction proceeds (e.g., crypto transfers), and Form 1099-DA for digital asset transactions. Kalshi does not issue a 1099 for event contract gains, as stated on help.kalshi.com.
What records should I keep for Kalshi trading taxes?
For Kalshi trading, you should keep detailed records including profit and loss statements from Kalshi, transaction histories, and any 1099 forms received. These records are crucial for substantiating income and deductions, regardless of whether gains are characterized as gambling winnings, capital gains, or Section 1256 contracts, as required by IRS Publication 529.
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Sources
- Kalshi Help Center, What tax documentation does Kalshi provide?, June 22, 2026
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.