Tax Center
Plain-English explainers on how prediction-market gains and losses are taxed: what to report, how Section 1256 works, and how to keep clean records. No jargon, no hype.
You can amend up to three prior years on Form 1040-X to claim Kalshi and Polymarket losses you never deducted. The §1256 carryback is a different, narrower move.
No IRS guidance says Kalshi or Polymarket contracts are wagering, and the record points the other way. What gambling treatment costs, and how Section 1256 compares.
Arbitrage profits are taxable, but how depends on the facts: gambling income, a Schedule C business, or possibly Section 1256 capital, and that decides the bill.
Keeping clean Kalshi and Polymarket records for tax season: what to track, how to pull your trade history, and the record-keeping mistakes to avoid.
From tax year 2026 the OBBBA caps the gambling-loss deduction at 90%, so break-even bettors can owe tax on phantom income. How §165(d) now works, and who it hurts.
The most common tax mistakes sports bettors and prediction-market traders make (from "no 1099 means nothing to report" to neglected records) and what to do instead.
Section 1256 contracts get a blended 60% long-term / 40% short-term rate, mark-to-market and a loss carryback. Why it may matter to prediction-market traders.
Yes. Kalshi winnings are taxable income in the US. How event-contract gains and losses are reported, why the treatment is unsettled, and what records to keep.
Looking for the bigger picture? Visit the Prediction Market Tax Center.