Polymarket Hack: How a Crypto Tax Calculator Helps Claim Theft Losses

Hackers infiltrated Polymarket's website via a compromised third-party vendor, swiping millions in crypto from users. The platform has promised refunds, but the incident raises a critical question for affected traders: how do you report stolen crypto on your taxes? A reliable crypto tax calculator can help you determine the deductible loss and ensure you comply with IRS or local tax rules. Whether you use crypto tax software or a manual method, understanding the tax treatment of theft is essential.

What Happened in the Polymarket Exploit?

On June 25, 2026, Polymarket disclosed that attackers gained access through a third-party vendor, compromising user funds. The company stated it will refund affected users, but the exact amount stolen remains undisclosed. This incident underscores the risks of relying on centralized platforms and the importance of securing your crypto assets. For tax purposes, the theft may qualify as a casualty loss or theft loss, depending on your jurisdiction.

How to Report Stolen Crypto on Your Taxes

When crypto is stolen, you may be able to claim a deduction. In the US, the IRS allows theft losses as itemized deductions, but only if the theft is reported to law enforcement and you have documentation. Using a crypto tax calculator, you can input the fair market value of the stolen assets at the time of the theft to compute the loss. Many crypto tax software options include a theft loss category, making it easy to generate a crypto tax report for your return.

Using a Crypto Tax Calculator for Theft Losses

A crypto tax calculator can simplify the process. You enter the date and value of the stolen crypto, and the tool calculates the deductible amount. Some advanced crypto tax software even integrates with exchange APIs to automatically identify suspicious transactions. For Polymarket victims, this means you can quickly assess your loss and determine if you need to adjust your estimated tax payments.

Steps to Calculate Crypto Taxes After a Hack

First, gather all transaction records from Polymarket and your wallet. Second, identify the stolen assets and their value at the time of theft. Third, report the theft to authorities and keep a copy of the report. Fourth, use a crypto tax calculator to compute the loss. Finally, include the loss on your tax return. A crypto tax report generated by reliable crypto tax software can serve as supporting documentation.

Illustrative Scenario

To illustrate how this applies in practice, consider the following scenario: Sarah, a crypto trader from the US, had 10 ETH stolen in the Polymarket hack. At the time, ETH was worth $3,000 each. She files a police report and uses a crypto tax calculator to determine her theft loss of $30,000. She then generates a crypto tax report using crypto tax software and claims the loss as an itemized deduction on her federal return, reducing her taxable income.

Source: Decrypt