Kalshi taxes explained: which 1099 you get, which you don't, and how trading gains are reported
The four forms Kalshi may issue
Kalshi's help article "What tax documentation does Kalshi provide?" is short, and its most important sentence is the one about what is missing. The forms it lists cover payments Kalshi makes to you and crypto movements through its processor. They do not cover the money you make or lose trading. The thresholds below are the IRS's, not Kalshi's; Kalshi says only that forms go to "users who hit certain reporting thresholds as defined by the Internal Revenue Service," and that if no form appears in your account "it is likely because you did not meet the IRS thresholds required for issuance."
| Form | What Kalshi uses it for | IRS reporting threshold | Filed with the IRS? |
|---|---|---|---|
| 1099-INT | Interest paid on cash in your account | $10 or more in the year | Yes |
| 1099-MISC | Credits, promotional rewards, referral bonuses | $2,000 or more for payments in tax years beginning after 2025 ($600 for 2025 and earlier); may be inflation-adjusted from 2027 | Yes |
| 1099-B | Proceeds from broker transactions such as crypto transfers through ZeroHash | Per transaction, no dollar minimum | Yes |
| 1099-DA | Digital asset transactions reported by ZeroHash | Per transaction, for digital asset sales and exchanges from 2025 | Yes |
| Profit and loss statement | Trading gains and losses on event contracts, FIFO, including fees and rebates | Always available in Account, then Tax Info | No |
Two practical points from the same article. Some forms are delivered electronically by Zenwork, Kalshi's tax form provider, so a 1099 can arrive as a secure download link in your email rather than in the app; check the spam folder in late January. And the P&L is refreshed on the morning of the first of each month, so a statement pulled on 20 January will not include trades after 1 January. The deadline for payers to furnish 1099-MISC and 1099-INT statements to recipients is 31 January.
Why the P&L is not a tax form
A 1099-B from a stockbroker tells the IRS what you sold, when, and for how much, and in most cases what you paid, because Congress has required brokers to report that since 2011. Nothing requires a designated contract market to report event contract gains the same way, and Kalshi does not. Its P&L is a courtesy summary with a disclaimer that it "is not tax advice," that Kalshi "can't advise members on taxes," and that members "are responsible for the accuracy of their returns."
That has two consequences. The first is that the IRS has no matching document, so the responsibility for reporting the number, and the exposure if you do not, is entirely yours. The second is that the P&L's method may not match the method you choose. Kalshi computes it first-in-first-out, which is one acceptable lot method but not the only one, and it nets fees and rebates into a single figure. A return that reports trades individually, as capital transactions must be, needs the full trade history exported and reconciled against the statement.
Three ways the gain can be characterised
The tax law has not caught up with a CFTC-regulated exchange where retail users buy yes and no contracts on a jobs number. Practitioners describe three candidate treatments, and the difference between them is large enough to matter at any volume.
| Treatment | Legal basis | Rate on gains | Losses | Forms |
|---|---|---|---|---|
| Section 1256 contract | 26 U.S.C. 1256(b)(1): regulated futures contracts and "nonequity options" listed on a qualified board or exchange, which includes any CFTC-designated contract market | 60% long-term, 40% short-term, whatever the holding period; open positions marked to market at year-end | Net loss offsets other capital gains; up to $3,000 a year against ordinary income; election to carry back three years against prior 1256 gains | Form 6781, then Schedule D |
| Capital asset | Default rule for property held for investment | Short-term (ordinary rates) if held a year or less, which is nearly every event contract; long-term otherwise | Offset capital gains; $3,000 a year against ordinary income; carry forward indefinitely | Form 8949, then Schedule D |
| Wagering | 26 U.S.C. 165(d), as amended for tax years beginning after 2025 | Ordinary income on winnings | Deductible only if you itemise, and from 2026 only up to the lesser of 90% of losses or total winnings | Schedule 1 for winnings, Schedule A for losses |
The Section 1256 argument runs through the statute's definition of a "nonequity option," which is "any listed option which is not an equity option," and of a listed option, which is one "traded on (or subject to the rules of) a qualified board or exchange," a category that expressly includes "a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission." Kalshi is such a board of trade, and a binary contract that pays $1 or $0 behaves economically like an option. The argument against it is section 1256(b)(2)(B), added by the Dodd-Frank Act, which says the section does not apply to "any interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap, or similar agreement." The CFTC's own product filings classify most event contracts as binary option swaps, and the agency's October 2026 rulemaking proposes to define event contracts as swaps explicitly. If they are swaps for tax purposes too, they are out of section 1256 and fall into capital asset treatment, or wagering treatment if the IRS were to view the activity as betting.
Kalshi's perpetual futures on bitcoin, gold and other commodities are a different product. The CFTC approved them as futures contracts in 2026, and a regulated futures contract is the first item on the section 1256 list, so the 60/40 case for perps is considerably stronger than for event contracts. The P&L does not separate the two; your trade history does.
A worked example: one year of trades
Suppose that during 2026 you made 40 trades on Kalshi, deposited by ACH, received a $25 sign-up credit, and earned $14 of interest on idle cash. Your P&L statement at the end of the year shows a net trading profit of $1,850 after $130 of fees. Here is what Kalshi sends, and what each reporting position does with the $1,850.
| Item | Amount | Kalshi form | Where it goes |
|---|---|---|---|
| Interest on cash | $14 | 1099-INT (threshold $10) | Schedule B or Form 1040 interest line, ordinary income |
| Sign-up credit | $25 | None (below the $2,000 1099-MISC threshold for 2026) | Still taxable as other income; report it anyway |
| Net trading profit | $1,850 | None; P&L statement only | Depends on the position below |
| Position: Section 1256 | $1,110 long-term, $740 short-term | Form 6781 | At a 24% bracket and 15% long-term rate: about $167 + $178 = $345 of tax |
| Position: capital asset, all short-term | $1,850 short-term | Form 8949 and Schedule D, trade by trade | At a 24% bracket: $444 of tax |
| Position: wagering | Winnings and losses reported gross | Schedule 1 and Schedule A | If the $1,850 net came from $6,000 of winning trades and $4,150 of losing ones, only $3,735 (90%) of losses is deductible, so $2,265 is taxed: about $544, and only if you itemise |
The example uses round figures and a single bracket to show the mechanics, not to estimate anyone's bill. Three things it shows. The forms Kalshi sends cover $39 of a $1,889 year, so the paperwork is almost entirely yours. The gap between the most and least favourable treatments is about $200 on $1,850 of profit, which scales linearly, so at $50,000 of profit it is about $5,400. And the wagering treatment is the only one where a break-even year produces a tax bill: under the 2026 rule, $20,000 of winnings against $20,000 of losses leaves $2,000 of taxable income, because only $18,000 of the losses can be deducted.
Losses, year-end positions and records
Under both capital treatments a net loss for the year offsets other capital gains first, then up to $3,000 of ordinary income, with the remainder carried forward. Section 1256 adds two features. Positions open at 31 December are treated as sold at fair market value on the last business day of the year and the gain or loss is recognised, so a contract you bought at 40 cents that is trading at 70 cents on New Year's Eve produces a taxable gain before it resolves. And a net section 1256 loss can, by election, be carried back three years against prior section 1256 gains, which ordinary capital losses cannot.
Whichever position you take, the records are the same: the full trade export from Kalshi, not the summary, so that each contract's cost, proceeds and dates are available; the P&L statement as a check on the total; and, if you adopt section 1256 or capital treatment, a note of the reasoning, because the IRS has issued no guidance and a consistently applied, documented position is the best protection if it later does. Practitioners who take the section 1256 position sometimes attach Form 8275 to disclose it. Crypto deposits add one more line: a 1099-B or 1099-DA from ZeroHash means you disposed of a digital asset when it was converted to dollars, and the digital asset question on Form 1040 must be answered yes.
What this guide does not cover
This is a guide to Kalshi's published tax documentation and the federal forms it connects to, as of October 2026. It does not cover state income tax, which varies and in some states treats gambling winnings differently from capital gains; non-resident or non-US account holders; trading through a broker such as Robinhood, which issues its own forms under its own rules; or the Kalshi perpetual futures fee and margin mechanics, which are in Kalshi fees explained. It does not tell you which of the three treatments to use. The IRS has published nothing specific to prediction market contracts, Kalshi's help centre does not take a position, and the right answer for a given return depends on facts and risk tolerance that a tax professional should assess. The $2,000 1099-MISC threshold, the $10 1099-INT threshold, the 90 percent loss limit and the text of section 1256 are quoted from the IRS instructions, IRS Publication 505 and the United States Code as read on 17 October 2026; thresholds change, and the 1099-MISC figure may be indexed from 2027. Nothing here is legal, tax or financial advice.
Frequently asked questions
Does Kalshi send a 1099 for trading profits?
No. As of October 2026 Kalshi's help centre lists four IRS forms it may issue: a 1099-INT for interest, a 1099-MISC for credits and rewards, and a 1099-B and 1099-DA for crypto transfers handled by ZeroHash. None of them reports your event contract trading profit. Kalshi provides a separate profit and loss statement for that, which is not filed with the IRS.
What is the 1099-MISC threshold for Kalshi bonuses?
For payments made in tax years beginning after 2025 the IRS threshold for reporting other income on Form 1099-MISC is $2,000, up from $600, and it may be indexed for inflation from 2027. Interest is reported on a 1099-INT at $10 or more. Kalshi says it issues forms only to users who meet the IRS thresholds, and that if you see no form you probably did not meet them.
Are Kalshi contracts taxed under Section 1256 at 60/40 rates?
It is unsettled. Section 1256 gives 60 percent long-term and 40 percent short-term treatment to regulated futures and to nonequity options listed on a CFTC-designated contract market, which Kalshi is, but a 2010 amendment excludes swaps and similar agreements, and the CFTC has classified most event contracts as swaps. Kalshi does not say which treatment applies. The IRS has not published guidance on prediction market contracts.
What changed for 2026 under the gambling loss rules?
For tax years beginning in 2026, the deduction for gambling losses on Schedule A is limited to the lesser of 90 percent of losses or total winnings. Someone who treats Kalshi activity as wagering and breaks even on $20,000 of winnings and $20,000 of losses would owe tax on $2,000. The rule does not apply if the contracts are treated as capital assets or Section 1256 contracts.
Where do I find my Kalshi tax documents?
Log in, open Account, then Tax Info, and select the year. The profit and loss statement there uses first-in-first-out accounting, includes fees and rebates, and is refreshed on the first of each month. Some forms are delivered by email through Zenwork, Kalshi's tax form provider.
Related
- Kalshi fees explained: taker, maker and the 0.07 formula
- How does Kalshi work? Contracts, prices, fees and payouts
- Odds converter: cent prices, American odds and the vig
- Is Kalshi legal in your state? The 50-state tracker
- Kalshi versus Polymarket fees
Sources
- Kalshi Help Center, What tax documentation does Kalshi provide?, read 17 October 2026, for the four forms, the P&L statement, FIFO, monthly refresh, Zenwork delivery and the disclaimer.
- Kalshi Help Center, How do I file taxes for my returns on Kalshi?, for the FIFO method and the Tax Info page.
- IRS, Instructions for Forms 1099-MISC and 1099-NEC, for the $2,000 threshold for tax years beginning after 2025, inflation adjustment from 2027 and the 31 January furnishing date.
- IRS, Instructions for Forms 1099-INT and 1099-OID, for the $10 interest threshold.
- IRS, Publication 505, What's New for 2026, for the limit of gambling losses to the lesser of 90 percent of losses or winnings.
- IRS, Topic 409, Capital gains and losses, for the $3,000 annual limit and carryforward.
- Legal Information Institute, 26 U.S. Code 1256, for the 60/40 rule, mark-to-market, the list of covered contracts, the swap exclusion in (b)(2)(B) and the definitions of nonequity option and qualified board or exchange.
- CFTC, Event contract product filings, for the classification of listed contracts, and press release 9309-26, 9 October 2026, for the proposed rule treating event contracts as swaps.
18+ only. Prediction market contracts carry real financial risk and you can lose everything you pay for a position. This page explains published tax documentation and statutes; it is not legal, tax, financial or betting advice. If gambling stops being fun, help is available at 1-800-GAMBLER.