How Long Should You Keep Prediction Market Tax Records?

The IRS baseline is three years from filing, but prediction market traders should plan on longer: at least six years, and keep cost basis records until three years after you've reported the disposal of the asset. Capital loss carryforwards, multi-year positions and the risk of a Kalshi or Polymarket data gap all stretch that period. A single annual download of each venue's history takes minutes and removes most of the risk.

OddsFile is software, not tax advice. The IRS has not issued guidance on how prediction-market contracts are taxed. This article explains the options and the sources behind them; a tax professional can tell you which position fits your situation.

The IRS retention periods

From the IRS page How long should I keep records?:

For property, the IRS says to keep records until the period of limitations expires for the year in which you dispose of the property.

Why three years often isn't enough

Basis follows you. If you buy a position or token in 2026 and sell in 2029, you need the 2026 purchase record until about 2033, three years after the 2029 return. A USDC or ETH purchase that funded your wallet counts too.

Carryforwards reach back. A capital loss from 2026 can carry for years. If you use it in 2031, the IRS can ask you to prove that 2031 deduction, which relies on your 2026 records.

Amended returns and refunds. If you might amend, you need the records behind the year you're changing.

Thin, shifting data. Polymarket has changed its collateral and its order book. Apps change. Exchanges shut down. Kalshi's P&L is updated monthly and could look different over time. A file you saved in 2027 is a better record than a future API call.

State rules. A state's limit can differ from the IRS's three years.

What to save, venue by venue

Kalshi

• Annual P&L statement, from Account, then Tax Info
• All 1099s, including small ones
• A fills and settlements export
• Deposit and withdrawal history
• Save it after the first of February or later, since Kalshi says data updates on the first of the month

Robinhood

• The event contracts annual statement, usually available in late January or early February, under Account, Reports and statements, Annual reports

Polymarket

• Every wallet address, including your proxy wallet
• Trades, redemptions and rewards as a CSV or other export
• Market resolution dates for positions you held
• Deposit and withdrawal transaction hashes
• Records around splits, merges and conversions

On-chain data is public, but explaining it isn't. Save your interpretation too: which wallet is yours, and what each transfer was.

Hyperliquid

• Your address
• Fills, funding, transfers and rewards
• Staking reward dates and USD values

Every venue

• The IRS requires records documenting receipts, sales, exchanges and other dispositions of virtual currency
• For gambling treatment, an accurate diary or similar record of winnings and losses, per Topic 419
• Your treatment memo: which treatment, which lot method, how you defined a session, and why

What an audit-ready file looks like

For each tax year, a folder with:

Keep at least two copies, one of them away from your main computer. Screenshots are fine as extra evidence, but use exported data as the main record. Keep wallet addresses, but never store private keys or seed phrases in a tax folder.

A simple retention plan

Six years is a practical choice, not an IRS rule. It simply matches the longer assessment period for a substantial omission. If you missed something, that's when you'd want the file. Disk space is cheap compared with rebuilding a year.

If your records are already gone

• Rebuild Polymarket and Hyperliquid from public on-chain data and venue APIs. That's possible years later.
• Request statements and history from Kalshi or your exchange.
• Use bank and exchange records to document your money in and money out.
• If you can't support a basis, ask a preparer what to do. An unsupported basis is at risk of being treated as zero in an audit.

Run the free OddsFile check: paste a Polymarket or Hyperliquid address and see your 2025 and 2026 P&L, no signup. It's a quick way to recover the shape of a year before rebuilding the detail. For how the numbers then go on the form, see how to report trades on Form 8949.

FAQ

Does the IRS accept CSV exports as records?

The IRS asks for records documenting your transactions. Exports are commonly used; keep the originals and any supporting statements as well.

Is on-chain history enough?

It's strong evidence of what happened, but it doesn't prove which wallets are yours or why funds moved. Keep your notes.

Can I delete old records after the three years?

Only if none of the longer situations apply. A carryforward or open basis keeps the relevant records alive.

Should I keep records of a year I didn't file?

Yes. If you didn't file when you should have, the IRS says to keep records indefinitely.