The following applies only to traders resident in the United States.

 

Pursuant to IRS regulations, PredictIt is required to issue Form 1099 to any trader who has a net profit of $600 or more in any calendar year. For IRS purposes, net profit is calculated as follows:

 

Net Profit = Gross Profits – Losses – Trading Fees – Withdrawal Fees.

 

The 5% withdrawal fee is included in the calculation whether or not the funds in question have actually been withdrawn from the account.

 

For example, a trader who had gained $1000 on the sale of some shares, lost $200 on the sale of other shares, and had paid $100 in fees on her profitable trades would have $700 remaining before the 5% withdrawal fee. Net profits for tax purposes would be:

 

$1000 - $200 - $100 - $35 = $665