Apply Arizona, Arkansas and California rules for a filer who can be claimed as a dependent

changelog.d/claimable-filer-az-ar-ca.fixed.md

@@ -0,0 +1 @@
+Apply Arizona, Arkansas and California rules for a filer who can be claimed as a dependent. A return on which the filer (or, if joint, either spouse) can be claimed, unless the would-be claimant files only for a refund, counts no dependents for Arizona's dependent credit, family credit and 2021 families rebate, Arkansas's dependent credit, disabled-dependent credit (except for a filer's own child, new input `ar_personal_credit_disabled_child_of_filer`) and low-income tables, or California's dependent exemption credit, and gets no childless CalEITC or foster youth credit. A claimable filer loses California's personal, senior and blind credits, and California's standard deduction follows its dependent worksheet, with earned income from the new `dependent_standard_deduction_earned_income` (taxable wages, self-employment and farm income). A filer who is claimed is not counted for Arizona's excise credit and, if they lived in the claimer's home, is not a qualified renter for California's renter credit (new input `lives_with_claiming_taxpayer`). Arkansas's care credit counts only childcare for a qualifying person. The Arizona, Arkansas and California dependent credit reforms, the state dependent exemption repeal and California's AB 2591 reform keep these rules. Arizona's 2021 families rebate counts at most three dependents on a joint return, as on every other return (Laws 2023, ch. 147, sec. 3(E)), and California's 2025 joint renter credit income limit is now $107,988.

policyengine_us/parameters/gov/states/az/tax/income/rebate/max_dependents.yaml

@@ -9,8 +9,8 @@ metadata:
   reference:
     - title: Arizona Families Tax Rebate
       href: https://azdor.gov/individuals/arizona-families-tax-rebate
-    - title: SB1734 - Arizona Families Tax Rebate
-      href: https://www.azleg.gov/legtext/56leg/1r/laws/0147.htm
+    - title: SB1734 - Arizona Families Tax Rebate (Laws 2023, ch. 147), sec. 3(C), (E)
+      href: https://www.azleg.gov/legtext/56leg/1R/laws/0147.pdf#page=4
 SINGLE:
   2021-01-01: 3
 HEAD_OF_HOUSEHOLD:
@@ -19,5 +19,8 @@ SEPARATE:
   2021-01-01: 3
 SURVIVING_SPOUSE:
   2021-01-01: 3
+# Sec. 3(E): "a maximum of three dependents for a qualifying taxpayer", with one
+# rebate for each 2021 return (sec. 3(C)). ADOR's $1,500 joint maximum
+# describes two 2021 families who married later, each with its own 2021 return.
 JOINT:
-  2021-01-01: 6
+  2021-01-01: 3

policyengine_us/parameters/gov/states/ca/tax/income/credits/renter/income_cap.yaml

@@ -16,19 +16,19 @@ SURVIVING_SPOUSE:
   2022-01-01: 98_440
   2023-01-01: 101_492
   2024-01-01: 104_842
-  2025-01-01: 107_987
+  2025-01-01: 107_988
 JOINT:
   2021-01-01: 90_896
   2022-01-01: 98_440
   2023-01-01: 101_492
   2024-01-01: 104_842
-  2025-01-01: 107_987
+  2025-01-01: 107_988
 HEAD_OF_HOUSEHOLD:
   2021-01-01: 90_896
   2022-01-01: 98_440
   2023-01-01: 101_492
   2024-01-01: 104_842
-  2025-01-01: 107_987
+  2025-01-01: 107_988
 
 metadata:
   period: year

policyengine_us/reforms/state_dependent_exemptions/repeal_state_dependent_exemptions.py

@@ -1,5 +1,8 @@
 from policyengine_us.model_api import *
 from policyengine_core.periods import period as period_
+from policyengine_us.variables.gov.states.ca.tax.income.exemptions.ca_exemptions import (
+    ca_personal_aged_blind_exemption_count,
+)
 
 
 def create_repeal_state_dependent_exemptions() -> Reform:
@@ -239,17 +242,18 @@ def formula(tax_unit, period, parameters):
                 over_agi_threshold / p.phase_out.increment[filing_status]
             )
             exemption_reduction = increments * p.phase_out.amount
-            # Personal Exemptions
-            personal_exemption_count = p.personal_scale[filing_status]
-            personal_aged_blind_exemption_count = personal_exemption_count + tax_unit(
-                "aged_blind_count", period
+            # Personal, blind and senior exemptions, as in the baseline
+            # (none for a filer who can be claimed elsewhere)
+            personal_aged_blind_exemption_count = (
+                ca_personal_aged_blind_exemption_count(
+                    tax_unit, period, p, filing_status
+                )
             )
             personal_aged_blind_exemption = max_(
                 0,
                 personal_aged_blind_exemption_count * (p.amount - exemption_reduction),
             )
-            # Dependent exemptions
-            # total exemptions
+            # Dependent exemptions repealed
             return personal_aged_blind_exemption
 
     class ga_exemptions(Variable):

policyengine_us/reforms/states/ar/dependent_credit/ar_dependent_credit_reform.py

@@ -18,7 +18,14 @@ def formula(person, period, parameters):
             # age; this person-level amount is summed via adds in
             # ar_personal_credits_potential, so the age gate composes.
             p = parameters(period).gov.contrib.states.ar.dependent_credit
-            is_dependent = person("is_tax_unit_dependent", period)
+            # As in the baseline, a return on which the filer (or, if joint,
+            # either spouse) can be claimed has no dependents (IRC 152(b)(1)).
+            # The would-be claimant's filing exception (not required to file and
+            # filing only for a refund, Publication 501) restores the dependents.
+            filer_is_dependent = person.tax_unit(
+                "head_or_spouse_is_dependent_elsewhere_without_filing_exception", period
+            )
+            is_dependent = person("is_tax_unit_dependent", period) & ~filer_is_dependent
             if p.age_limit.in_effect:
                 age = person("age", period)
                 eligible = is_dependent & (age < p.age_limit.threshold)

policyengine_us/reforms/states/az/dependent_credit/az_dependent_credit_reform.py

@@ -21,7 +21,17 @@ def formula(tax_unit, period, parameters):
                 period
             ).gov.states.az.tax.income.credits.dependent_credit
             p = parameters(period).gov.contrib.states.az.dependent_credit
-            dependent = person("is_tax_unit_dependent", period)
+            # As in the baseline, a return on which the filer (or, if joint,
+            # either spouse) can be claimed has no dependents (A.R.S.
+            # 43-1001(3), IRC 152(b)(1)).
+            # The would-be claimant's filing exception (not required to file and
+            # filing only for a refund, Publication 501) restores the dependents.
+            filer_is_dependent = tax_unit(
+                "head_or_spouse_is_dependent_elsewhere_without_filing_exception", period
+            )
+            dependent = person("is_tax_unit_dependent", period) & ~tax_unit.project(
+                filer_is_dependent
+            )
             age = person("age", period)
             if p.age_limit.in_effect:
                 eligible = dependent & (age < p.age_limit.threshold)

policyengine_us/reforms/states/ca/ab2591/ab2591.py

@@ -1,5 +1,8 @@
 from policyengine_us.model_api import *
 from policyengine_core.periods import period as period_
+from policyengine_us.variables.gov.states.ca.tax.income.deductions.standard.ca_standard_deduction import (
+    ca_dependent_standard_deduction_limit,
+)
 
 
 def create_ca_ab2591() -> Reform:
@@ -52,7 +55,14 @@ def formula(tax_unit, period, parameters):
             # statutory standard deduction.
             elected_deduction = max_(fpl_deduction, baseline_deduction)
 
-            return where(p_ab2591.in_effect, elected_deduction, baseline_deduction)
+            deduction = where(p_ab2591.in_effect, elected_deduction, baseline_deduction)
+            # Assumes the bill leaves 17073.5(c)(2) in place, so the IRC
+            # 63(c)(5) limit for a filer who can be claimed as a dependent
+            # applies to whichever deduction is taken (and to the baseline
+            # amount in years the election is not in effect).
+            return ca_dependent_standard_deduction_limit(
+                tax_unit, period, parameters, deduction
+            )
 
     class reform(Reform):
         def apply(self):

policyengine_us/reforms/states/ca/dependent_credit/ca_dependent_credit_reform.py

@@ -1,5 +1,8 @@
 from policyengine_us.model_api import *
 from policyengine_core.periods import period as period_
+from policyengine_us.variables.gov.states.ca.tax.income.exemptions.ca_exemptions import (
+    ca_personal_aged_blind_exemption_count,
+)
 
 
 def create_ca_dependent_credit_reform() -> Reform:
@@ -25,10 +28,12 @@ def formula(tax_unit, period, parameters):
             )
             exemption_reduction = increments * p.phase_out.amount
 
-            # Personal exemptions (unchanged)
-            personal_exemption_count = p.personal_scale[filing_status]
-            personal_aged_blind_exemption_count = personal_exemption_count + tax_unit(
-                "aged_blind_count", period
+            # Personal, blind and senior exemptions (unchanged from baseline,
+            # including the rules for a filer who can be claimed elsewhere)
+            personal_aged_blind_exemption_count = (
+                ca_personal_aged_blind_exemption_count(
+                    tax_unit, period, p, filing_status
+                )
             )
             personal_aged_blind_exemption = max_(
                 0,
@@ -40,7 +45,16 @@ def formula(tax_unit, period, parameters):
             # dependent is age-eligible, matching the baseline count.
             person = tax_unit.members
             age = person("age", period)
-            is_dependent = person("is_tax_unit_dependent", period)
+            # As in the baseline, a return on which the filer (or, if joint,
+            # either spouse) can be claimed has no dependents (IRC 152(b)(1)).
+            # The would-be claimant's filing exception (not required to file and
+            # filing only for a refund, Publication 501) restores the dependents.
+            filer_is_dependent = tax_unit(
+                "head_or_spouse_is_dependent_elsewhere_without_filing_exception", period
+            )
+            is_dependent = person("is_tax_unit_dependent", period) & ~tax_unit.project(
+                filer_is_dependent
+            )
             if c.age_limit.in_effect:
                 eligible = is_dependent & (age < c.age_limit.threshold)
             else:

policyengine_us/tests/core/test_claimable_filer_az_ar_ca_invariants.py

@@ -0,0 +1,150 @@
+"""Arizona, Arkansas and California rules for a filer who can be claimed as a
+dependent.
+
+Arizona's dependent and family credits, excise credit and 2021 families
+rebate, Arkansas's dependent, disabled-dependent and low-income-table rules,
+and California's standard deduction, exemption credits, CalEITC, foster youth
+credit and renter credit apply IRC 151(d)(2) and 152(b)(1) and each state's
+own text.
+
+For couples drawn by Hypothesis, a seeded population and crafted cases in the
+three states (renters who lived with the person who can claim them, and a
+disabled dependent who is a filer's own child, someone else's child, or of
+unknown relationship), with either, both or neither spouse claimed:
+
+1. Swap invariance: each output is the same under either head/spouse
+   labelling.
+2. Monotonicity: marking another filer as claimed never raises a credit,
+   deduction or eligibility below.
+3. Identities: a return with a claimable filer gets no Arizona dependent
+   credit or families rebate and no Arkansas dependent credit, and a return
+   on which every filer is claimed gets no Arizona excise credit (the cases
+   set the claim input, so claimability follows it and the filing exception
+   is off).
+"""
+
+import numpy as np
+import pytest
+from hypothesis import HealthCheck, given, settings
+from hypothesis import strategies as st
+
+from policyengine_us.tests.core.test_claimable_filer_federal_invariants import (
+    check_monotone,
+    check_swap,
+)
+from policyengine_us.tests.core.test_dependent_elsewhere_head_spouse_swap_invariance import (
+    CLAIM_PATTERNS,
+    _calc,
+    _crafted_cases,
+    _seeded_couples,
+    adults,
+    dependents,
+)
+
+STATES = ["AZ", "AR", "CA"]
+# 2021 covers the Arizona families rebate; 2026 the new Arizona amounts.
+YEARS = [2021, 2023, 2025, 2026]
+MONOTONE = [
+    "az_dependent_tax_credit_potential",
+    "az_family_tax_credit_eligible",
+    "az_family_tax_credit_potential",
+    "az_increased_excise_tax_credit",
+    "az_families_tax_rebate",
+    "ar_personal_credits_potential",
+    "ca_standard_deduction",
+    "ca_exemptions",
+    "ca_eitc_eligible",
+    "ca_eitc",
+    "ca_foster_youth_tax_credit",
+    "ca_renter_credit",
+]
+# Arkansas's tax can rise when the low-income table changes, so it is checked
+# only for swap invariance.
+OUTPUTS = MONOTONE + [
+    "ar_income_tax_before_non_refundable_credits_unit",
+    "state_income_tax",
+]
+
+
+def _identities(sim, year):
+    claimed_filer = _calc(sim, "head_or_spouse_is_dependent_elsewhere", year) > 0
+    every_filer = _calc(sim, "every_filer_is_dependent_elsewhere", year) > 0
+    for name in ["az_dependent_tax_credit_potential", "az_families_tax_rebate"]:
+        assert not _calc(sim, name, year)[claimed_filer].any(), name
+    ar_dependent = np.asarray(
+        sim.calculate("ar_personal_credit_dependent", year, map_to="tax_unit")
+    )
+    assert not ar_dependent[claimed_filer].any()
+    assert not _calc(sim, "az_increased_excise_tax_credit", year)[every_filer].any()
+
+
+def _claimable_rule_cases():
+    """Cases for the inputs the shared strategies never set."""
+    renter = {
+        "age": 20,
+        "employment_income": 2_000.0,
+        "rent": 6_000.0,
+        "lives_with_claiming_taxpayer": True,
+    }
+    earner = {"age": 30, "person_id": 1, "employment_income": 20_000.0}
+    cases = []
+    for state in STATES:
+        for claimed in CLAIM_PATTERNS:
+            cases.append(
+                {
+                    "state": state,
+                    "adults": [
+                        {**renter, "person_id": 1},
+                        {**renter, "person_id": 2, "age": 22},
+                    ],
+                    "dependents": [],
+                    "claimed": claimed,
+                }
+            )
+            # Parent id 1 is the first adult; 99 is a parent outside the
+            # household; no id leaves the relationship unknown.
+            for parent in (1, 99, None):
+                dependent = {"age": 8, "is_disabled": True, "person_id": 3}
+                if parent is not None:
+                    dependent["parent_1_id"] = parent
+                cases.append(
+                    {
+                        "state": state,
+                        "adults": [earner, {"age": 32, "person_id": 2}],
+                        "dependents": [dependent],
+                        "claimed": claimed,
+                    }
+                )
+    return cases
+
+
+@st.composite
+def couples(draw):
+    return {
+        "state": draw(st.sampled_from(STATES)),
+        "adults": [draw(adults()), draw(adults())],
+        "dependents": draw(st.lists(dependents(), max_size=2)),
+        "claimed": draw(st.sampled_from(CLAIM_PATTERNS)),
+    }
+
+
+@settings(
+    max_examples=2,
+    deadline=None,
+    derandomize=True,
+    suppress_health_check=[HealthCheck.too_slow, HealthCheck.data_too_large],
+)
+@given(st.sampled_from(YEARS), st.lists(couples(), min_size=6, max_size=12))
+def test_az_ar_ca_claimable_filer_rules_are_label_free(year, units):
+    check_swap(units, year, OUTPUTS, _identities)
+
+
+@pytest.mark.parametrize("year", YEARS)
+def test_az_ar_ca_claimable_filer_rules_seeded_population(year):
+    units = (
+        _seeded_couples(STATES, per_state=3)
+        + _crafted_cases(STATES)
+        + _claimable_rule_cases()
+    )
+    check_swap(units, year, OUTPUTS, _identities)
+    check_monotone(units, year, MONOTONE, _identities)