My understanding for this year is as long as the kids don't have any other income, the PFD ($1022) is below the exemption for claiming income ($1050). He/she owes no tax and is not required to file.
If you claim that income on your return for your income I think it will be taxed at your rate.
I've filed my kid separately the last few years, but didn't file him this year because he was exempt.
As an aside, I'd love to know how much federal tax has been dodged by PFD recipients.
I'll bet its in the millions.
