PredictIt Taxes: Does PredictIt Send a 1099, and How Do You Report Winnings?

PredictIt says it issues a Form 1099 to any US-resident trader with net profit of $600 or more in a calendar year. That number is a net figure, calculated by PredictIt, and it isn't the only amount that matters: profit below the threshold is still taxable, and a net loss won't produce a form at all. How to classify the profit is the same open question as for Kalshi and Polymarket, because the IRS has issued no guidance.

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.

What PredictIt says about the 1099

PredictIt's FAQ on net profit for tax reporting describes the calculation:

An older PredictIt support article describes the pre-2026 formula, with the 5% withdrawal fee counted whether or not the funds had been withdrawn. So the method depends on the year you're filing for. We could read these PredictIt pages only in search extracts, so confirm the wording in your own account or with PredictIt.

PredictIt's fee page says it charges 10% on your profit when you sell a share for more than you paid, with no fee on break-even or losing trades.

The $600 threshold in 2026

PredictIt's page uses $600. For most Form 1099-MISC payments made in 2026, the IRS threshold rose to $2,000. Whether PredictIt changes its practice isn't something we could confirm. Don't rely on either number. The threshold decides whether a form is sent, not whether income is taxable.

The form tells you less than you think

A single net figure raises the same problem as Kalshi's P&L.

• Capital treatment needs dates, cost and proceeds per position.
• Gambling treatment needs gross winnings and gross losses, not a net.
• Other income can use a net figure, but you should still be able to support it.

So keep your own detail, even with a form in hand.

How to report it

If your 1099-MISC reports an amount, the IRS has that number. Whichever method you use, your return should account for it. If you use capital treatment, make sure the total of your reported results reconciles to the form, and keep a note explaining the difference. Otherwise you may get a CP2000 notice.

Worked example

A 2026 PredictIt year, with all positions closed:

Withdrawal fees don't reduce the 2026 net under PredictIt's stated rule. They're still a real cost, and how you handle them depends on the treatment. Under capital treatment, costs tied to a position affect basis or proceeds; a general withdrawal fee is less clear, and for an investor it may not be deductible. See prediction market expenses.

At a 22% bracket, $1,100 of ordinary income is about $242 of federal tax. Under gambling treatment with the standard deduction, the taxable figure could be the $3,600 of net-of-fee winnings, or about $792.

Does Section 1256 apply to PredictIt?

It's doubtful, for the same reason as Kalshi event contracts. Section 1256 needs a regulated futures contract, which has two parts: a system of marking to market for deposits and withdrawals, and trading on a qualified board or exchange. Check PredictIt's current regulatory status for the exchange test. Even if it passes, fully paid contracts with no margining are a poor fit for the first test. See Section 1256 and prediction markets.

Losses

If you lost money, you'll generally receive no 1099, but the loss may still help under capital treatment. A $1,500 net capital loss can offset other capital gains, or up to $3,000 of other income. Under gambling treatment, it only offsets gambling winnings, and only if you itemize. Under other-income treatment, it generally gives you nothing. See are prediction market winnings taxable?

Don't miss the digital asset question

PredictIt is a dollar-based platform, so PredictIt activity alone generally doesn't make the digital asset answer Yes. Other crypto you touched during the year still counts.

Records to save

• Your 1099, if any
• PredictIt's account history, as far back as it goes
• Your deposit and withdrawal records
• Which formula applied to which tax year
• Your treatment note

Save these before you close an account, since old records may be hard to get later.

If you also trade on-chain, run the free OddsFile check: paste a Polymarket or Hyperliquid address and see your 2026 P&L under each treatment, no signup. Combine it with your PredictIt figures for the year.

FAQ

Does PredictIt report to the IRS?

A 1099 is an IRS information return. If PredictIt issues you one, assume the IRS has a copy.

I made $400. Do I report it?

Yes. There's no minimum for taxable income.

Is PredictIt's net profit the same as what I withdrew?

No. Withdrawals are cash movements. Net profit follows your trading results.

Can I deduct PredictIt's 10% profit fee?

It's already reflected in PredictIt's net figure. Don't subtract it a second time.