Do You Need a Specialist for Kalshi or Polymarket Taxes?

No law says you need a specialist for Kalshi or Polymarket taxes. A small, simple year can be filed without one. A large or messy year often justifies a preparer, because the tax method you choose can move the bill by thousands of dollars and the IRS hasn’t said which method is right.

Who is allowed to prepare your return?

The IRS says any tax professional with a preparer tax identification number (PTIN) can prepare a federal return. The credentials differ most in what happens if the IRS contacts you.

None of these is a prediction market credential. “Specialist” here is a description a preparer gives themselves, so test it with the questions further down. The IRS Directory of Federal Tax Return Preparers lets you check a credential.

When can you file without one?

You’re in a good position to do it yourself if all of these are true:

• You report under capital gains or ordinary income, and you aren’t claiming 60/40.
• You have complete trade records, and you can’t see any gaps.
• Your positions and your crypto transfers are simple enough to explain line by line.
• You reported your earlier years, or this is your first year trading.
• Your amounts are small enough that an error wouldn’t hurt much.

When is a preparer worth hiring?

• You want Section 1256. It’s the most contested position in this area, and one published analysis warns of a Form 8275 disclosure if you take it.
• You skipped past years. See what to do about unreported years. If you left income out on purpose, go to a tax attorney.
• Your gains or losses are large. The difference between methods grows with the size of your year.
• You trade like a business. White & Case raises self-employment tax for regular traders. Business hedges have their own same-day identification rule.
• Your history has complications. That includes perpetual futures, stolen funds, or income in more than one state.
• You’ve received an IRS letter. Use someone with unlimited representation rights: an enrolled agent, CPA or attorney.

Why might a preparer say no to a position?

Preparers carry their own risk. Under Section 6694, a preparer can owe the greater of $1,000 or 50% of their income from the return if an understatement comes from a position without substantial authority. A position disclosed properly needs only a reasonable basis.

With no IRS guidance on event contracts, you may hear a “no” on 60/40 or a request to file Form 8275. That is a normal response to an unsettled area, and it tells you the preparer has looked at the question.

What should you ask a preparer?

1. Have you filed a return with Kalshi, Polymarket or other event contracts before?
2. Which tax method would you use for my trades, and what is your reason?
3. What is your view on Section 1256 for these contracts, and would you sign a return that uses it?
4. Would you file Form 8275 for any position on my return?
5. How do you handle crypto deposits and withdrawals, and any 1099-DA or 1099-B?
6. Can you represent me if the IRS has questions? Are you an enrolled agent, CPA or attorney?
7. What is your fee, and what would make it go up?

What should you bring?

• Your per-trade records, plus Kalshi’s activity export and its Profit and Loss statement.
• Any 1099-INT, 1099-MISC, 1099-B or 1099-DA, and your wallet addresses if you used polymarket.com.
• Your earlier returns, and any capital loss carryover.
• A WagerMints report. It shows your trades under all four methods, so the conversation starts from your own numbers. Running them is free, and Pro is $39 per tax year for the forms.

Questions about hiring help

General information about US federal tax, not tax advice.