Updated for the 2025 filing season
Step-by-step instructions for reporting Polymarket trades to the IRS. Learn the exact forms you need, how gains are classified, and the deadlines to avoid penalties.
No. Polymarket operates as a decentralized protocol and does not collect U.S. taxpayer identification numbers. Because there is no Form 1099-B, the IRS treats you as responsible for tracking every taxable event. Keep copies of withdrawal receipts and your PolyTax-generated Form 8949.
For context, see the IRS Form 8949 instructions outlining taxpayer recordkeeping responsibilities.
U.S. Polymarket traders generally prepare three documents:
PolyTax automates the calculations and produces a PDF plus CSV export you can attach to your return or upload to software like TurboTax, TaxAct, or FreeTaxUSA.
Learn how schedule totals work →Most markets resolve within the same tax year, so gains are short-term and taxed at your ordinary income rate (10%-37%). If you hold shares longer than 12 months, you may qualify for long-term rates (0%, 15%, 20%). Document acquisition and resolution timestamps—PolyTax captures both automatically from on-chain data.
Buying YES shares in January 2024 and selling in February 2025 produces a long-term gain. If you closed the position before January 2025, it would remain short-term. The distinction matters when you flow totals to Schedule D Part II.
If you expect to owe at least $1,000 in tax after withholding, the IRS requires quarterly estimated payments. Use Form 1040-ES vouchers and reference IRS guidance for due dates. Traders with consistent profits often pay estimates to avoid underpayment penalties.
Maintain a durable archive of your activity: wallet addresses, transaction hashes, market descriptions, and USD conversions. PolyTax preserves this data and can regenerate reports for prior years. We recommend storing copies with cloud backups or secure encrypted drives.
When in doubt, document the why behind each gain or loss. Notes about hedging political contracts or using proxy wallets help your CPA respond quickly to IRS inquiries.
Written by Elaine Wong, CPA, a U.S. tax advisor who has prepared Form 8949 filings for prediction market traders since 2021. Content reviewed February 2025. Calculations rely on on-chain trade data pulled via the official Polymarket API, enriched with historical USD exchange rates, and reconciled against exporter balances before generating final 8949 line items.
Disclaimer: This guide is for educational purposes. Consult your own tax professional for personalized advice.
Generate a complete IRS package—Form 8949, Schedule D, CSV exports, and audit trail—in under two minutes.