Bot for KalshiNobody's favorite topic, but if you're making money on Kalshi, you need to understand how it's taxed. The short version: Kalshi gains are taxable, the rules are evolving, and good record-keeping now prevents headaches later.
Disclaimer: This is educational content, not tax advice. Consult a tax professional for your specific situation.
How Kalshi Reports Your Income
Kalshi may issue tax forms when current reporting rules require them. The specific form, threshold, and treatment can depend on the contract and the taxpayer. Do not infer tax classification from the venue's CFTC status alone.
Section 1256: The 60/40 Rule
Section 1256 is one classification question to discuss with a tax professional. If a specific contract and taxpayer qualify under current law, the familiar framework is:
- 60% long-term capital gains (lower tax rate)
- 40% short-term capital gains (ordinary income rate)
Do not apply that split until a qualified professional confirms it for the specific contract and filing year. A different classification can produce different reporting and loss treatment.
Record Keeping
Regardless of how contracts are ultimately classified, keep records of:
- Every trade (entry date, exit date, ticker, price, quantity, P&L)
- Total deposits and withdrawals
- Net gains/losses by tax year
- Any 1099 forms Kalshi sends you
If you're running bots, your trading activity log IS your tax record. Export it regularly.
Common Mistakes
- Relying only on a form. Keep your own records and ask what must be reported even if no form arrives.
- Assuming a classification. Event-contract tax treatment can be fact-specific; do not label every position the same without current advice.
- Poor record keeping. If you trade 500 contracts a year, you need organized records. Don't wait until April to figure it out.
- Ignoring state taxes. Some states have their own treatment of prediction market gains.
Deductions
A qualified tax professional can tell you whether any business, expense, or election rules apply. Possible questions to ask include:
- Data subscriptions and research costs
- Software and hosting for trading bots
- Bot for Kalshi subscription fees
- Home office (if applicable)
Again: consult a tax professional, especially if your Kalshi trading generates significant income.
Frequently Asked Questions
Quick answers to common questions about Kalshi Tax Guide: How Your Gains Are Taxed.
Do you have to pay taxes on Kalshi winnings?
Yes. Trading gains on Kalshi are taxable income in the U.S., and you're responsible for reporting them whether or not you receive a tax form. Keep records of every trade. This is educational information, not tax advice — consult a tax professional for your situation.
Does Kalshi send a 1099?
Kalshi may issue tax forms when current reporting rules require them. The form and threshold can change, and receiving no form does not necessarily remove a filing obligation. Confirm the current account tax documents and ask a qualified tax professional.
How are Kalshi gains taxed?
Treatment can vary depending on how prediction-market contracts are classified (including questions around Section 1256 treatment for some exchange-traded contracts). Because the rules are evolving and depend on your circumstances, confirm the current treatment with a tax professional before filing.
Can I deduct Kalshi losses?
Generally, trading losses can offset trading gains, but how and how much depends on the classification of the contracts and your overall tax situation. Keep detailed records of every position so your preparer can apply the correct rules.
What records should I keep for Kalshi taxes?
Keep a log of each trade — market, date, entry and exit prices, quantity, fees, and settlement outcome. Kalshi's account history and any 1099 are starting points, but your own records are what let you (or your CPA) report accurately and substantiate losses.
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