Why Polymarket Tax Reporting Is Complex
Polymarket is a prediction market platform where you buy and sell outcome shares. When a market settles, your shares are either redeemed at $1 (if your prediction was correct) or expire worthless. Every one of these events can create a taxable gain or loss that needs to be reported to your tax authority.
How prediction markets are taxed
- Buying outcome shares: When you buy shares in a prediction market, you establish a cost basis. If you buy 100 "Yes" shares at $0.60 each, your cost basis is $60.
- Market settlement (redemption): If the market resolves in your favor, your shares are redeemed at $1 each. The difference between the redemption value and your cost basis is a taxable gain. In the example above, that is a $40 gain.
- Losing positions: If the market resolves against you, your shares expire worthless. Your entire cost basis becomes a capital loss that may offset other gains.
- Trading before settlement: Selling outcome shares before the market settles is also a taxable event. The gain or loss is the difference between your sale price and your cost basis.
What makes it hard to calculate
- Hundreds of markets: Active Polymarket traders may have positions across dozens or hundreds of markets, each with its own cost basis and settlement date.
- Partial fills and multiple trades: You might buy into the same market at different prices over time, creating multiple cost basis lots that need FIFO matching.
- Open positions: Unsettled markets still hold value but are not taxable until sold or redeemed. Tracking the boundary between realized and unrealized P&L is essential.
- Deposits and withdrawals: USDC deposits and withdrawals are not taxable events, but they need to be classified correctly so they are not confused with trading activity.
How DYOR.tax solves this
Enter your Polymarket proxy wallet address and we scan your full activity on-chain. Our engine identifies every trade, redemption, and settlement, then calculates market-by-market P&L using FIFO cost basis. Deposits and withdrawals are classified separately and excluded from gains calculations.
For the most complete report, you can optionally upload your Polymarket History CSV to enrich the wallet scan with deposit and withdrawal details.
What is in the report
Your report includes a capital gains filing table mapped to your country's tax forms, a full market-by-market P&L breakdown showing each settled market with your entry price, exit price, and gain or loss. Win/loss statistics, open position equity, and a complete transaction audit trail are also included.
Do I need to report open positions?
In most jurisdictions, open (unsettled) prediction market positions are not taxable until they are sold or redeemed. Your report tracks open positions separately and shows their current equity value without including them in your taxable gains calculation.
Polymarket tax guides by country
Each country page covers the specific tax frameworks, USDC layer obligations, filing requirements, and common mistakes for Polymarket traders in that jurisdiction:
🇺🇸 US - 🇬🇧 UK - 🇨🇦 Canada - 🇦🇺 Australia - 🇳🇿 New Zealand - 🇮🇳 India - 🇿🇦 South Africa