The prediction-market tax record-keeping checklist
The quarterly routine
Export trade history from every venue you traded on — Kalshi, Polymarket US, and Robinhood statements if you trade event contracts there. Download account statements and any tax forms issued during the quarter. File them by venue and month, unmodified.
Screenshot or save the terms of every promotion you claimed, with the date. Promo credits can be taxable miscellaneous income, and the terms page will not look the same when you need it.
The year-end additions
In January, collect every 1099 the venues issue: 1099-INT for interest on balances, 1099-MISC for reportable promo or referral payments, 1099-DA for digital-asset transactions. Remember what is missing — no 1099-B — and that the gap is yours to fill.
Reconcile totals before filing: exported trade history should tie out to deposits, withdrawals, and ending balances. A reconciliation that ties is the difference between a defensible return and a guess.
Habits that save money
Keep one characterization. Whatever treatment you and your tax professional choose — Section 1256, Schedule D, or otherwise — apply it uniformly across venues and years, and write down the reasoning when you adopt it.
Separate accounts help. Trading from a dedicated bank account makes the deposit/withdrawal reconciliation trivial and keeps prediction-market cash flows out of your personal noise.
FAQ
How long should I keep prediction-market records?
At least three years after filing, matching the general IRS audit window — and longer if any year is open or positions span years. Storage is cheap; keep everything.
Do I need records for losing years?
Yes. Loss treatment is one of the unsettled questions in this space, and every treatment requires the same trade-level record. A losing year with clean records preserves every option.
What is the single most common mistake?
Assuming a 1099-B will arrive. It will not under current practice, and reconstructing a year of active trading from memory in April is where errors and overpayments happen.