My child received $992 in unearned dividend income via 2020 Alaska PFD. My understanding is that because this amount is less than the $1,100 threshold it is not taxable and my child doesn't need to file a return (this is the only income they had for the year). My question is, does this dividend income still need to be reported on my return, even though its below the taxable threshold?
The IRS is very clear about reporting Alaska Permanent Fund Dividends (PFDs). However, a child must meet the filing requirements for a dependent before they are required to file. If their only income is unearned income and it is below $1,100 for 2020, then they are not required to file and you do not have to report the dividends on your return. See IRS Publication 501, page 3 and 4.
A child's Alaska PFD needs to be reported, even if it was their only source of income in 2020.
If your child's total income was exclusively unearned (meaning the Alaska PFD, plus interest, dividends, or capital gains distributions—no wages or other income earned by working) and was less than $11,000, you can either report their PFD on your return or your child can report it on their own return.
See Where do I enter my 2020 Alaska Permanent Fund Dividend (Alaska PFD)? for additional information and discussion of this issue.
Thank you for your response but there is an issue with reporting this income with Turbo Tax. There is a discussion happening at the bottom this thread Solved: Re: Do I have to claim my child's Alaska PFD of $1... (intuit.com) regarding if the PFD income really does need to be reported and if so how to do it. Any input you have would be greatly appreciated!
The IRS is very clear about reporting Alaska Permanent Fund Dividends (PFDs). However, a child must meet the filing requirements for a dependent before they are required to file. If their only income is unearned income and it is below $1,100 for 2020, then they are not required to file and you do not have to report the dividends on your return. See IRS Publication 501, page 3 and 4.
Thank you @DianeW777 for the direct and clear answer on this! Getting questions like this answered is an absolute must have if I'm going to use Turbo Tax again in the future. I appreciate your help!