Are Kalshi rewards, bonuses, and interest taxable?
Most Kalshi tax confusion is about trading gains, but there's a second bucket people overlook: the rewards, referral credits, bonuses, and cash interest you may receive. This is income you often do get a form for, and it's taxed separately from your trades.
This guide sorts out which is which. It is educational, not tax advice.
- Unlike your trading P&L, ancillary income often comes with an information return.
- These are generally treated as ordinary income, reported in the year received.
- Interest paid on idle cash is ordinary interest income, reported like any other 1099-INT interest.
- The key mistake is mixing buckets: your trading gains, your rewards income, and your interest are three separate things.
The income you usually get a form for
Unlike your trading P&L, ancillary income often comes with an information return. Rewards, referral credits, and bonuses may arrive on a 1099-MISC once they cross the reporting threshold, and interest on your cash balance may come on a 1099-INT.
When a form is issued to you, a copy goes to the IRS, so these are visible and should be reported.
Rewards, referrals, and bonuses
These are generally treated as ordinary income, reported in the year received. A referral credit or sign-up bonus is income to you even though it didn't come from trading.
Report the amount shown on any 1099-MISC, and report it even if no form arrives but you received the credit.
Interest on your cash
Interest paid on idle cash is ordinary interest income, reported like any other 1099-INT interest. It's small for most traders but still reportable.
Keep it separate from your trading gains so you don't blur the two.
Don't double-count
The key mistake is mixing buckets: your trading gains, your rewards income, and your interest are three separate things. Adding a referral bonus into your trading total, or vice versa, distorts both.
Track them separately and report each on its proper line.