Count the pre-2018 miscellaneous deduction once in Mississippi and Missouri itemized deductions

changelog.d/ms-mo-misc-deduction-double-count.fixed.md

@@ -0,0 +1 @@
+Count the pre-2018 federal miscellaneous deduction once in Mississippi and Missouri itemized deductions.

policyengine_us/parameters/gov/states/mo/tax/income/deductions/itemized.yaml

@@ -1,8 +1,9 @@
 description: Missouri lets filers itemize the following deductions.
 values:
   1993-01-01:
-    - itemized_taxable_income_deductions # includes casualty_loss_deduction, charitable_deduction, interest_deduction, salt_deduction ,and medical_expense_deduction
-    - misc_deduction
+    # Form MO-A Part 2 line 1: total federal itemized deductions, which include
+    # the miscellaneous deduction above the 2% floor before 2018.
+    - itemized_taxable_income_deductions
     - employee_social_security_tax
     - employee_medicare_tax
     - additional_medicare_tax
@@ -22,3 +23,5 @@ metadata:
       href: https://dor.mo.gov/forms/MO-1040%20Instructions_2021.pdf#page=16
     - title: 2024 Form MO-A - Individual Income Tax Adjustments, Part 2 - Missouri Itemized Deductions
       href: https://dor.mo.gov/forms/MO-A_2024.pdf#page=2
+    - title: 2017 Form MO-1040 instructions, Form MO-A Part 2 line 1
+      href: https://dor.mo.gov/forms/MO-1040%20Instructions_2017.pdf#page=22

policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_itemized_deductions.yaml

@@ -5,7 +5,6 @@
     itemized_taxable_income_deductions: 0
     employee_social_security_tax: 0
     employee_medicare_tax: 0
-    misc_deduction: 0
     mo_net_state_income_taxes: 0
     state_code: MO
   output:
@@ -15,10 +14,11 @@
   period: 2021
   absolute_error_margin: 0.01
   input:
-    itemized_taxable_income_deductions: 10
+    # Form MO-A Part 2 line 1 is the federal total, which already includes
+    # any miscellaneous deduction.
+    itemized_taxable_income_deductions: 20
     employee_social_security_tax: 0
     employee_medicare_tax: 0
-    misc_deduction: 10
     mo_net_state_income_taxes: 10
     state_code: MO
   output:
@@ -28,10 +28,9 @@
   period: 2021
   absolute_error_margin: 0.01
   input:
-    itemized_taxable_income_deductions: 1000
+    itemized_taxable_income_deductions: 2000
     employee_social_security_tax: 0
     employee_medicare_tax: 0
-    misc_deduction: 1000
     mo_net_state_income_taxes: 1000
     state_code: MO
   output:
@@ -51,3 +50,20 @@
     households: {household: {members: [head, spouse], state_code: MO}}
   output:
     mo_itemized_deductions: 50_000
+
+# 2017 Form MO-A Part 2 line 1 is total federal itemized deductions from Form
+# 1040 line 40, which already includes the miscellaneous deduction above the
+# 2% floor; Part 2 has no separate line for it.
+- name: 2017 miscellaneous deduction counted once
+  period: 2017
+  absolute_error_margin: 0.01
+  input:
+    charitable_deduction: 9_000
+    misc_deduction: 1_000
+    employee_social_security_tax: 0
+    employee_medicare_tax: 0
+    mo_net_state_income_taxes: 0
+    state_code: MO
+  output:
+    itemized_taxable_income_deductions: 10_000
+    mo_itemized_deductions: 10_000

policyengine_us/tests/policy/baseline/gov/states/ms/tax/income/deductions/itemized/ms_itemized_deductions_unit.yaml

@@ -0,0 +1,20 @@
+# 2017 Form 80-108 lines 7a to 7d take miscellaneous expenses above 2% of
+# federal AGI once; itemized_deductions_less_salt already includes them.
+- name: 2017 miscellaneous deduction counted once
+  absolute_error_margin: 0.01
+  period: 2017
+  input:
+    charitable_deduction: 2_000
+    misc_deduction: 1_000
+    state_code: MS
+  output:
+    ms_itemized_deductions_unit: 3_000
+
+- name: 2025 no miscellaneous deduction subject to the 2% floor
+  absolute_error_margin: 0.01
+  period: 2025
+  input:
+    charitable_deduction: 2_000
+    state_code: MS
+  output:
+    ms_itemized_deductions_unit: 2_000

policyengine_us/variables/gov/states/ms/tax/income/deductions/itemized/ms_itemized_deductions_unit.py

@@ -12,12 +12,15 @@ class ms_itemized_deductions_unit(Variable):
         "https://www.dor.ms.gov/sites/default/files/tax-forms/individual/80100221.pdf#page=15",
         "https://www.dor.ms.gov/sites/default/files/tax-forms/individual/80108228.pdf",  # Line 7
         "https://law.justia.com/codes/mississippi/title-27/chapter-7/article-1/section-27-7-17/",
+        # 2017 instructions, Form 80-108 lines 7a to 7d.
+        "https://taxsim.nber.org/historical_state_tax_forms/MS/2017/80100178.pdf#page=15",
     )
     defined_for = StateCode.MS
 
+    # itemized_deductions_less_salt already includes the federal miscellaneous
+    # deduction above the 2% floor (Form 80-108 lines 7a to 7d before 2018).
     adds = [
         "itemized_deductions_less_salt",
-        "misc_deduction",
         "ms_real_estate_tax_deduction",
     ]