How to Report Polymarket Trades on Your Taxes

Polymarket is one of the largest prediction markets in the world, but it works very differently from Kalshi. Those differences affect how you track your trades and how they may be taxed.

Why Polymarket is different

Polymarket's main international platform runs on the Polygon blockchain, and trades settle in USDC, a dollar-pegged stablecoin. That platform is not a CFTC-regulated exchange. That's the key reason many advisors don't assume Section 1256's 60/40 treatment applies to it the way it often does for Kalshi.

Polymarket has also launched a US platform under CFTC oversight. If that's where you trade, the analysis may be closer to Kalshi's, so tell your preparer which platform you used.

The two common treatments

Tax rules for event contracts are still unsettled, and advisors take different positions. QastLedger lets you choose between the two most common treatments for your Polymarket trades:

• Standard capital gains, based on holding period. Positions held one year or less are short-term and taxed at your ordinary income rate. Positions held longer are long-term. Most Polymarket markets resolve within a year, so most trades end up short-term.
• 60/40 split. Some traders and advisors conclude that certain contracts qualify for Section 1256 treatment. If you and your advisor decide that, you can apply it to your Polymarket trades.

Some advisors take other positions entirely, such as treating winnings as gambling income. If that's your situation, work through it with your preparer.

You probably won't get a tax form

Polymarket's international platform generally doesn't send US users a 1099 for their trading. That means the job of tracking every position, and the fees on it, falls on you.

The good news is that every trade is recorded on the blockchain. Your full history can be pulled from your public wallet address alone, with no password, private key or seed phrase involved. That's how QastLedger connects to Polymarket: you paste your wallet address, and we pull your positions.

How to report it

1. Pull your full history. Connect your wallet address in QastLedger, or import a CSV if you traded from more than one wallet.
2. Review net P&L per position. Check that fees are removed and every closed position appears once.
3. Choose a treatment. Pick holding-period treatment or 60/40 for your Polymarket trades, based on your advisor's guidance.
4. File the right forms. Under holding-period treatment, positions go on Form 8949: Part I for short-term, Part II for long-term. Anything you treat as 60/40 goes on Form 6781. Both flow into Schedule D.

For more on which form holds what, read Form 6781 vs. Form 8949. If you also trade on Kalshi, see how Kalshi trades are taxed.

This guide is general information, not tax advice. Tax treatment of event contracts is still evolving, so confirm how it applies to you with a tax professional.