Apply the 6012(a)(1) federal filing requirement from 2026

changelog.d/fix-filing-requirement-6012a1-2026.fixed.md

@@ -0,0 +1 @@
+Apply the 26 U.S.C. 6012(a)(1) federal filing requirement from 2026, when section 6012(f) expires: for a tax unit nobody can claim as a dependent, the threshold is the basic standard deduction plus the additions for age but not blindness, and gross income equal to it requires a return.

changelog.d/fix-filing-requirement-dependents.fixed.md

@@ -0,0 +1 @@
+Stop testing every filer's unearned income against $500 in the federal filing requirement (26 U.S.C. 6012): the unearned income test now applies only to a head or spouse who can be claimed as a dependent on another return, uses the section 63(c)(5)(A) amount for the year ($1,350 in 2025) plus that person's own additional standard deduction for age or blindness, and counts that person's gross income other than wages, business income and farm income (the earned income of the IRS dependent worksheet), so a self-employment loss no longer counts as unearned income.

policyengine_us/parameters/gov/irs/income/filing_requirement/standard_deduction_rule/applies.yaml

@@ -0,0 +1,12 @@
+description: The Internal Revenue Service applies the section 6012(f) filing requirement, which compares gross income with the standard deduction, instead of section 6012(a)(1), if this is true.
+values:
+  2013-01-01: false
+  2018-01-01: true
+  2026-01-01: false
+metadata:
+  unit: bool
+  period: year
+  label: IRS section 6012(f) filing requirement applies
+  reference:
+    - title: 26 U.S. Code § 6012(a)(1) and (f)
+      href: https://www.law.cornell.edu/uscode/text/26/6012#f

policyengine_us/tests/core/test_filing_requirement_dependent_invariants.py

@@ -40,7 +40,7 @@
 loss, interest and dividends) and runs each batch, with four variants of every
 unit, as one simulation for 2025 and 2026. Every batch starts with two fixed
 units, one that must file and one that need not, so that each property below
-has rows to check and the batch holds both answers; the test asserts both.
+has rows to check and both answers occur; the test asserts that it does.
 
 5. Split invariance: moving a filer's wages into interest, or interest into
    wages, never changes the result for a tax unit whose head and spouse cannot
@@ -73,15 +73,22 @@
   instructions, Chart A) but it does reduce the earned income that sets the
   limited standard deduction, so a smaller loss raises the threshold and not
   the income. `test_smaller_loss_can_end_the_requirement` pins the case.
-- Property 7 leaves out blind filers. The model counts the additional
-  standard deduction for blindness in every filer's threshold. Chart A does
-  not (only age), while Table 2 does, so on the charts a blind filer under 65
-  with wages between the two amounts must file only if nobody can claim them.
-  The property holds in the model today, and leaving blind filers out keeps it
-  true under either reading. It also leaves out separate filers: Table 2 lets
-  a claimable married dependent filing separately skip a return unless the
-  spouse itemizes, while sections 6012(f) and (a)(1) require one with any
-  gross income (decision d1395).
+- Property 7 leaves out blind filers. Chart A does not count blindness (only
+  age), while Table 2 does, so on the charts a blind filer under 65 with
+  wages between the two amounts must file only if nobody can claim them. From
+  2026 the model follows Chart A here: section 6012(a)(1)(B) raises the
+  threshold of a filer nobody can claim for age only, while a filer who can
+  be claimed keeps the standard deduction test (decision d1395).
+- Property 7 also leaves out separate filers: Table 2 lets a claimable
+  married dependent filing separately skip a return unless the spouse
+  itemizes, while sections 6012(f) and (a)(1) require one with any gross
+  income (decision d1395).
+- From 2026, property 7 also fails at one dollar: gross income equal to the
+  threshold of a sighted filer nobody can claim. Section 6012(a)(1)(A)
+  excuses that filer only if gross income is "less than" the threshold, while
+  a filer who can be claimed is tested with "in excess of" (d1395). The
+  property skips those units, and
+  `test_claimability_can_end_the_requirement_at_the_threshold` pins the case.
 - Properties 1, 2 and 9 use wages as the only earned income. Earned income for
   the limited deduction is net of the deductible part of self-employment tax
   on the IRS worksheet, which Table 2 does not spell out.
@@ -129,8 +136,8 @@ def table_2_single_dependent(earned, unearned, aged, blind):
     return unearned_test | earned_test | gross_test
 
 
-def simulate(units):
-    """One simulation of independent tax units.
+def simulate(units, **options):
+    """One simulation of independent tax units; options go to Simulation.
 
     Each unit is {"filing_status": name, "adults": [...], "children": [...]},
     with one dict of person inputs per member. Every unit states its filing
@@ -168,7 +175,8 @@ def simulate(units):
             "tax_units": tax_units,
             "households": households,
             **groups,
-        }
+        },
+        **options,
     )
 
 
@@ -192,6 +200,13 @@ def head_values(units, name):
     return np.array([unit["adults"][0].get(name, 0) for unit in units])
 
 
+def unit_totals(simulation, units, variable, year):
+    """A person variable summed over the members of each unit."""
+    values = np.asarray(simulation.calculate(variable, year))
+    sizes = [len(unit["adults"]) + len(unit["children"]) for unit in units]
+    return np.add.reduceat(values, np.cumsum([0] + sizes[:-1]))
+
+
 def head_medicaid_requirement(simulation, units, year):
     """`medicaid_person_is_required_to_file` for each unit's head."""
     values = simulation.calculate("medicaid_person_is_required_to_file", year)
@@ -483,9 +498,18 @@ def test_filing_requirement_properties(anchors, drawn):
             f"{year}: more income ended the requirement"
         )
         assert required["base"].any() and not required["base"].all()
-        # Property 7.
+        # Property 7, except at the 2026 threshold (see the docstring).
         sighted = ~anyone_blind[:, 0] & ~separate[:, 0]
-        assert not (required["base"] & ~required["claimed"])[sighted].any(), (
+        ended = required["base"] & ~required["claimed"]
+        if year >= 2026:
+            gross_income = unit_totals(
+                simulation, units, "irs_gross_income", year
+            ).reshape(-1, len(VARIANTS))[:, 0]
+            standard_deduction = np.asarray(
+                simulation.calculate("standard_deduction", year)
+            ).reshape(-1, len(VARIANTS))[:, 0]
+            ended &= ~(nobody_claimable & (gross_income == standard_deduction))
+        assert not ended[sighted].any(), (
             f"{year}: being claimable ended the requirement"
         )
         # Property 8.
@@ -526,3 +550,14 @@ def test_smaller_loss_can_end_the_requirement():
     units[1]["adults"][0]["self_employment_income"] = -100
     required = simulate(units).calculate("tax_unit_is_required_to_file", 2025)
     assert required.tolist() == [True, False]
+
+
+def test_claimability_can_end_the_requirement_at_the_threshold():
+    # Intended exception to property 7 from 2026. Nobody can claim the first
+    # filer, whose $16,100 of wages equals the threshold of section
+    # 6012(a)(1)(A)(i), so a return is due. The second filer can be claimed;
+    # $16,100 does not exceed their standard deduction of $16,100
+    # ((a)(1)(C)(i)(II) and Chart B), so no return is due (decision d1395).
+    units = [single_filer(40, False, claimed, 16_100, 0) for claimed in (0, 1)]
+    required = simulate(units).calculate("tax_unit_is_required_to_file", 2026)
+    assert required.tolist() == [True, False]