I Didn't Report Kalshi or Polymarket in Past Years. What Now?

Fix it by filing. If you filed a return that left out your Kalshi or Polymarket trades, use Form 1040-X. If you never filed, file the past due return. Profit is taxable even when no form arrived. A losing year may get you money back, but only within a time limit.

Which case are you in?

Do you owe tax if you never got a form?

Yes, if you made a profit. Kalshi’s Documents page says “Kalshi does not report profits/losses to the IRS.” Polymarket sends no tax forms. Neither fact makes the income tax free, and either platform’s records can still exist when a return is reviewed.

A $10,000 short-term gain in the 22% bracket adds $2,200 of federal tax, before interest and any penalty. A year with a net loss works differently. You may owe nothing extra, and you may be owed money.

How do you amend a past return?

Use Form 1040-X, one for each year, and include any forms that change, such as Form 8949 and Schedule D. You can e-file it through tax software. The IRS says the amended return replaces your original.

Pay any extra tax when you file. If you’re filing after the April due date, the IRS says not to add interest or penalties yourself, because it works those out and bills you.

If your state taxes income, its return may need the same correction. Each state has its own form and deadline. Find your state.

What if you never filed at all?

File the past due return the same way you’d file an on-time one. If you’ve received an IRS notice, send it to the address on the notice. The IRS says filing and paying now limits interest and late payment penalties, and it warns that you can lose a refund if you wait more than 3 years from the return’s due date.

What penalties can apply?

You can ask for relief. The IRS may remove or reduce some penalties if you acted in good faith and can show reasonable cause. Its First Time Abate waiver applies to taxpayers with three years of timely compliance, and the IRS says it is moving to a new program, Automatic Exemption from Penalty, starting in summer 2026.

How far back can the IRS go?

• 3 years after the return was filed, as the general rule.
• 6 years if you left out income of more than 25% of the gross income stated on the return.
• No limit if you filed no return, filed a false or fraudulent return with intent to evade, or willfully tried to evade the tax.

These limits aren’t a reason to wait. Interest and late payment penalties keep growing, and a year with no return never starts the clock.

Can you claim a loss from a past year?

Often, yes. A refund claim generally has to be filed within 3 years of filing the original return or 2 years of paying the tax, whichever is later. A return filed early counts as filed on its due date. So a 2023 return filed by the April 15, 2024 deadline generally stays open for a refund until April 15, 2027, and an extension can push that date later.

How much a loss helps depends on your method. A capital loss offsets capital gains and then up to $3,000 of other income, and the rest carries forward. If a loss year is past the deadline, ask a preparer whether an unused loss still carries into a year you can change. Before 2026, gambling losses were deductible up to winnings, if you itemized. The 90% limit only starts in 2026.

Which tax method do you use for past years?

The same four are on the table: capital gains, Section 1256, ordinary income and gambling. No IRS guidance picks one. Choose the one you can support for that year and keep your reasoning with the return. The choice also sets what carries forward into later years, so look at the years together before you file the first one. How each method is reported.

Where do you get old trade records?

• Kalshi: go to Account, then Tax Info, and pick the year to download the Profit and Loss statement. Download your trade and activity files too, because the statement is a summary, not a filing number.
• polymarket.com: your trades are on a public blockchain, so your wallet address can rebuild the history. How Polymarket history works.
• Crypto deposits: keep the cost of whatever you moved in, and any 1099-B or 1099-DA from those transfers.

What should you do first?

1. List each year you traded, and whether you filed a return for it.
2. Download the records for each of those years.
3. Work out the result for each year, so you know which years owe tax and which are losses.
4. Check the refund deadline on the loss years. If you’re close, file those first. A preparer is worth hiring here if more than one year is involved.
5. File, pay what you can, and ask about a payment plan and penalty relief for the rest.

Questions about unreported prediction market trades

To stay current from here, run this year’s trades through WagerMints and see all four methods before you file. General information about US federal tax, not tax advice.