Polarising reflection and refraction for a wrap around water surface
The most commonly suggested method seems to be Mueller calculus, which boils down to tracking the Stokes parameters of a light ray to represent the polarization of light transmitted along that ray. A ray might be unpolarized—Stokes parameters of (1, 0, 0, 0)—or it may be circularly or linearly polarized in various directions, which is a property of light in the aggregate. At the surface light is scattered according to the polarization and the Stokes vector is propagated by multiplying it by the Mueller matrix of the surface.

Here's a writeup by Toshiya Hachisuka about ray tracing while tracking light polarization. It seems like a good introduction, and there are several references that seem promising. The article argues for direct tracking of the polarization state of the ray: instead of an aggregate representation, individually tracking the direction and frequency of the two harmonic oscillations of a given light ray. This may have the disadvantage that you need more samples to reproduce the polarization effects accurately, but it may be able to reproduce more effects (in the article, thin-film interference).