REMINDER: The Permanent Fund Dividend and Resource Rebate Are Taxable
The Internal Revenue Service reminds Alaskans that the Alaska Permanent Fund
Dividend and this year’s Resource Rebate payment is taxable income for both adults
and children, and must be reported on a Federal income tax return.
Because of the size of the PFD this year, every child under 18 who is a dependent will
be required to file a tax return, and will be affected by the “kiddie tax” rules. Many older
children may be affected as well.
Special Tax Rules for Children
Special tax rules apply to children under age 18, and – beginning in 2008 – certain older
children who receive more than $1,800 of unearned income, including the Permanent
Fund Dividend, Resource Rebate, and Native Corporation Dividends. Some people refer
to this as the “kiddie tax.”
Beginning in 2008, the age of children whose unearned income is taxed at their parent’s
rate increased. For children under age 18 and certain older children (described below),
unearned income over $1,800 is taxed at the parent’s rate. These special tax rules apply
to children who meet all of the following conditions:
1. The child had more than $1,800 of unearned income (defined below).
2. The child is required to file a tax return.
3. The child either:
a. Was under age 18 at the end of 2008,
b. Was age 18 at the end of 2008 and did not have earned income that was
more than half of the child’s support, or
c. Was over age 18 and under age 24 at the end of 2008 and was a full-time
student who did not have earned income that was more than half of the
child’s support. (Full-time Student and Support are defined below.)
4. At least one of the child’s parents was alive at the end of 2008.
5. The child does not file a joint return for 2008.
Unearned Income: For Form 8615, unearned income includes taxable interest, ordinary
dividends (including taxable Native Corporation Dividends), capital gains (including
capital gains distributions), rents, royalties, taxable social