Robinhood Prediction Market 1099: How to Read and File It
Robinhood prediction market 1099 reporting explained in 5 steps. Section 1256 treatment, cost basis checks, and a worked example of a full year of trades.
What Your Robinhood Prediction Market 1099 Actually Shows
Your Robinhood prediction market 1099 is a 1099-B that reports every event contract you closed or that settled during the tax year. It arrives by mid-February, bundled into the same consolidated 1099 that covers your stocks, options, and crypto. The prediction market entries sit alongside everything else, which makes them easy to overlook and easy to misfile.
Every Robinhood event contract routes through Kalshi's CFTC-regulated exchange. That routing determines the tax treatment. Because Kalshi operates as a designated contract market (DCM), most tax professionals apply Section 1256 rules to these contracts. You get a 60/40 split: 60% of gains taxed at the long-term capital gains rate, 40% at your ordinary income rate. That is true regardless of whether you held the contract for 10 minutes or 10 months.
The consolidated format creates a specific problem. Your 1099-B lumps event contracts together with stock and options trades. The IRS sees one document. You need to separate the event contract entries and report them on Form 6781 (Section 1256 Contracts) rather than treating them like ordinary stock sales. For the full picture of how all platforms handle tax reporting, start with our prediction market tax guide.
How Section 1256 Treatment Works for Robinhood Event Contracts
Section 1256 is the tax code provision that covers regulated futures contracts traded on a DCM. Since Robinhood event contracts execute on Kalshi's DCM, the same rules apply.
The 60/40 split means your effective tax rate on event contract gains is always lower than your ordinary income rate. Here is the math at common brackets:
| Tax Bracket | Ordinary Rate | Section 1256 Blended Rate | Savings per $1,000 |
|---|---|---|---|
| 22% | 22% | 18.2% | $38 |
| 24% | 24% | 19.6% | $44 |
| 32% | 32% | 25.2% | $68 |
| 35% | 35% | 27.0% | $80 |
| 37% | 37% | 28.4% | $86 |
Section 1256 also triggers mark-to-market on December 31. Any open event contract positions are treated as if you sold them at fair market value on the last day of the year. You owe tax on unrealized gains and can deduct unrealized losses. Your cost basis resets to the December 31 price on January 1.
This prevents the common tax-deferral trick of holding losing positions into the next year. It also means you might owe tax on positions you have not closed. Plan accordingly. For a deeper treatment of each classification, see our event contract tax treatment guide.
Where to Find Tax Documents in the Robinhood App
Robinhood makes tax documents available in the app and on the web. Here is the path:
The consolidated 1099 is a single PDF that covers all account activity. Inside it, look for a section labeled with references to event contracts or Kalshi-cleared trades. These are your prediction market entries. Everything else (stocks, ETFs, options, crypto) follows standard reporting rules on Schedule D.
If you also trade directly on Kalshi, you will receive a separate 1099-B from Kalshi for those trades. Do not double-count. Trades placed through Robinhood appear on Robinhood's 1099. Trades placed directly on Kalshi appear on Kalshi's 1099. The underlying exchange is the same, but the reporting entity differs. Our Kalshi 1099 guide covers the direct-platform version in detail.
Worked Example: A Full Year of Robinhood Event Contract Trading
Here is a realistic year for a moderately active Robinhood event contract trader. These numbers show exactly how the 1099-B, fees, and Section 1256 treatment interact.
Profile: 150 trades across 2025. Mix of political, economic, and sports contracts. Average position size of 50 contracts. 32% federal tax bracket.
Annual summary:
| Metric | Amount |
|---|---|
| Total contracts bought | 7,500 |
| Average entry price | $0.48 |
| Winning trades | 87 (58%) |
| Losing trades | 63 (42%) |
| Gross proceeds (settlements + sales) | $5,125.00 |
| Total cost basis | $3,600.00 |
| Total fees paid (entry + exit) | $225.00 |
| Net gain before tax | $1,300.00 |
The 1099-B reports gross proceeds of $5,125.00 and cost basis of $3,825.00 (original cost plus entry fees). Fees on the exit side reduce proceeds. The reported gain is $1,300.00.
Section 1256 tax calculation:
| Portion | Amount | Rate | Tax |
|---|---|---|---|
| 60% long-term | $780.00 | 15% | $117.00 |
| 40% short-term | $520.00 | 32% | $166.40 |
| Total | $1,300.00 | 21.8% blended | $283.40 |
If this same $1,300 were taxed entirely at the short-term rate (as it would be on an unregulated platform like Polymarket), the bill would be $416.00. Section 1256 saves $132.60. That is a 31.9% reduction.
Now scale it. A trader with $13,000 in net gains saves $1,326. At $50,000, the savings hit $5,100. The blended rate advantage compounds with volume. Factor the tax treatment into your expected value before entering positions using the fee calculator.
5 Common 1099 Mistakes Robinhood Traders Make
Your 1099 is a tax document the IRS already has a copy of. Mismatches trigger letters. Here are the mistakes that generate the most problems.
1. Treating event contracts like stock trades. Event contracts belong on Form 6781 (Section 1256), not lumped into Schedule D with your stocks. If your tax software auto-imports your Robinhood 1099 and puts everything on Schedule D, you lose the 60/40 split and overpay.
2. Missing the mark-to-market entries. If you held open positions on December 31, Robinhood reports the unrealized gain or loss. Traders who do not understand mark-to-market ignore these entries and underreport. The IRS does not ignore them.
3. Incorrect cost basis on multi-lot positions. If you bought 50 contracts at $0.40 and another 50 at $0.55, your cost basis is $47.50 total, not $40.00 or $55.00. Robinhood uses FIFO (first in, first out) by default. If you sold only 50 contracts, the cost basis should reflect the first lot ($0.40 each). Check this against your own records.
4. Double-counting trades also on Kalshi. If you trade on both Robinhood and Kalshi directly, those are separate 1099s from separate reporting entities. Every trade appears on exactly one 1099. Robinhood trades appear on the Robinhood 1099. Direct Kalshi trades appear on the Kalshi 1099. Do not add them together and report them twice.
5. Forgetting about fees already embedded. Robinhood fees are built into the cost basis and proceeds on your 1099-B. They are not a separate deductible line item. Claiming trading fees as a separate deduction double-counts the benefit and will not survive an audit.
How Event Contracts Appear Alongside Stocks and Options
The consolidated format is convenient but creates classification risk. Your Robinhood 1099-B has sections for different asset types. Event contracts should appear in a section referencing regulated futures or CFTC contracts. But the exact formatting can vary.
Here is what to look for when you review the document:
| Asset Type | 1099-B Section | Tax Form | Treatment |
|---|---|---|---|
| Stocks held < 1 year | Short-term | Schedule D | Short-term capital gains |
| Stocks held > 1 year | Long-term | Schedule D | Long-term capital gains |
| Options | Short or long-term | Schedule D | Based on holding period |
| Event contracts | Regulated futures | Form 6781 | Section 1256 (60/40 split) |
The risk is that tax software treats every entry on the 1099-B identically. TurboTax, H&R Block, and similar tools have added event contract support, but auto-import can still misclassify entries. After importing, verify that event contract transactions route to Form 6781, not Schedule D.
If you cannot identify which entries are event contracts, export your Robinhood trade history and filter by asset type. Match each event contract entry on the 1099-B to your trade log. This reconciliation takes 20-30 minutes and prevents classification errors that cost real money.
Cost Basis Accuracy: What to Verify
Robinhood calculates cost basis using the price you paid plus entry fees. Most of the time this is correct. It breaks down in three specific scenarios.
Partial fills at different prices. You place a market order for 100 contracts. The order fills 60 at $0.52 and 40 at $0.54. Your blended cost basis should be $52.80 per contract, not $52.00 or $54.00. Verify Robinhood reports the correct blended figure.
Contracts bought across multiple orders. You buy 30 contracts on Monday at $0.45 and 30 more on Wednesday at $0.50. Under FIFO, if you later sell 30, the cost basis should use the Monday lot ($0.45). This is standard, but you need your own trade log to confirm it.
Settlement versus sale. When a contract settles at $1.00 or $0.00, Robinhood reports the settlement as a disposal. The proceeds are $1.00 (for Yes contracts that resolve Yes) or $0.00 (for Yes contracts that resolve No). There is no sell-side fee on settlement. Verify the proceeds figure matches the settlement outcome.
Run your total annual fees through the fee calculator to cross-check the aggregate fee impact against what your 1099-B implies. If the total reported gain differs from your own records by more than a few dollars, investigate before filing.
Filing Step by Step
Once you have your 1099-B and have verified the entries, filing follows a clear sequence.
Form 6781 is straightforward. Line 1 takes your net Section 1256 gain or loss. The form splits it: 60% goes to Schedule D Line 11 (long-term) and 40% to Schedule D Line 4 (short-term). From there, standard Schedule D rules apply.
If you had a net loss on Section 1256 contracts, you get a bonus: three-year carryback. Net Section 1256 losses can be carried back to offset Section 1256 gains from the three prior years. File amended returns to claim refunds on taxes already paid. This is not available under standard capital gains treatment and is one of the biggest advantages of trading on CFTC-regulated platforms. For the full comparison of how each classification handles losses, see our event contract tax treatment guide.
If you also trade on Polymarket or other unregulated platforms, those gains follow different rules and do not go on Form 6781. Keep them separate. For offshore platform reporting, see our Polymarket tax guide.
Frequently asked questions
- Does Robinhood send a 1099 for prediction market trades?
- Yes. Robinhood includes event contract activity on your consolidated 1099-B, the same document that covers your stocks and options. It is available in the Tax Documents section of your account by mid-February.
- Are Robinhood event contracts taxed differently than stocks?
- Yes. Robinhood event contracts route through Kalshi's CFTC-regulated exchange and most tax professionals apply Section 1256 treatment. Gains are split 60% long-term and 40% short-term regardless of holding period. Stocks are taxed based on how long you held them.
- What form do I use to report Robinhood prediction market taxes?
- Form 6781 (Gains and Losses from Section 1256 Contracts). The form splits your net gain or loss 60/40 and sends each portion to Schedule D. Do not report event contracts directly on Schedule D like stock trades.
- What if I trade on both Robinhood and Kalshi?
- You will receive separate 1099-B forms from each. Robinhood reports trades placed through its app. Kalshi reports trades placed directly on its platform. Both qualify for Section 1256 treatment. Do not double-count trades that appear on both documents.
- Can I deduct Robinhood event contract fees on my taxes?
- Fees are already embedded in the cost basis and proceeds on your 1099-B. They reduce your reported gain automatically. Do not claim them as a separate deduction, as that would double-count the tax benefit.