Plan for taxes on PFD income

Several articles have been written about the PFD in the past week. Many people splurged, spending their dividend on “high priced toys and gadgets” and it has been great for area businesses. Also mentioned were garnishments where some or all of the money is taken to cover unpaid taxes, child support and other overdue payments. This year the PFD is so large, paying out $2,069 plus the $1,200 energy rebate, people need to remember the entire $3,269 is taxable even if some or all was taken as a garnishment.

The higher PFD payout means you will owe more taxes this year. For comparison, tax on the $1,654 PFD last year came to $81 for a dependent child with no other income. This year, because of the amount of the PFD and rebate, taxes owed will range an estimated $240 to $800 per person depending on the size of your family and your income.

If you typically get a large refund, the additional tax may make your refund much smaller this year. People who usually get a small refund or owe taxes should put money aside now so you will be prepared. If it is not needed for taxes you will have money saved to actually use for gas, fuel oil or wood.

It is not too late to save. Some people are still waiting for checks, which will be mailed out starting Sept. 30. For those who spent their direct deposit PFD, you have until April 15, so start putting money aside now.

People with low to middle income and simple returns who need assistance in filing their tax return can get free assistance through AARP/Tax-Aide sites throughout the Valley and Anchorage.

Locations of these sites can be found during the tax season at www.aarp.org type “tax help” in the search field. For more information go to www.irs.org, key words Alaska pfd or contact the Internal Revenue Service at 1-800-829-1040.

Vicki Geronimi

AARP/Tax-Aide