Gate the DC EITC ITIN extension to 2023 and apply the IRC 152(c)(2) relationship test to EITC qualifying children

changelog.d/dc-eitc-itin-relationship-fixes.fixed.md

@@ -0,0 +1 @@
+Limit the DC EITC ITIN extension to tax years from 2023 (D.C. Code 47-1806.04(f)(1)(D), added by D.C. Law 24-167 section 7012, not D.C. Law 23-149), cite the D-40 Line 27a instructions for sending a DC filer whose qualifying children have no Social Security number or ITIN to the childless schedule, and stop counting a disabled parent or grandparent dependent as an EITC qualifying child under IRC 152(c)(2) in the federal, CA, CO, DC, IL, MN and WA credits.

policyengine_us/parameters/gov/states/dc/tax/income/credits/eitc/itin_eligible.yaml

@@ -0,0 +1,14 @@
+description: The District of Columbia accepts an individual taxpayer identification number for the filer, spouse and qualifying children under its earned income tax credit if this is true.
+values:
+  2015-01-01: false
+  # (f)(1)(D)(ii) applies to taxable years beginning after December 31, 2022.
+  2023-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: DC EITC ITIN eligibility
+  reference:
+    - title: Code of the District of Columbia § 47–1806.04 (f)(1)(D)(ii)
+      href: https://code.dccouncil.gov/us/dc/council/code/sections/47-1806.04#(f)(1)(D)(ii)
+    - title: D.C. Law 24-167, Fiscal Year 2023 Budget Support Act of 2022, § 7012
+      href: https://code.dccouncil.gov/us/dc/council/laws/24-167

policyengine_us/parameters/gov/states/dc/tax/income/credits/eitc/qualifying_child_tin_required.yaml

@@ -0,0 +1,45 @@
+description: The District of Columbia treats a filer whose qualifying children all lack a Social Security number or individual taxpayer identification number as a filer without a qualifying child under its earned income tax credit if this is true.
+values:
+  # From 2023 the D-40 Line 27a instructions require each qualifying child to
+  # have a Social Security number or ITIN and send a filer whose children have
+  # neither to the childless schedule. No DC source settles earlier years;
+  # the 2021 and 2022 booklets' qualifying-child rules have no identification
+  # test. Read alone, D.C. Code 47-1806.04(f)(4) and IRC 32(c)(3)(D) keep such
+  # a child a qualifying child, which closes the (f)(1)(C) childless
+  # schedule; setting this to false applies that reading. ARPA section 9622,
+  # "Taxpayer eligible for childless earned income credit in case of
+  # qualifying children who fail to meet certain identification
+  # requirements", struck former IRC 32(c)(1)(F) from 2021, and the 2021
+  # booklet's "New for 2021" note repeats it. PolicyEngine applies the
+  # childless treatment in every year, so a child with neither number never
+  # counts.
+  2015-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: DC EITC qualifying child identification requirement
+  reference:
+    - title: Code of the District of Columbia § 47–1806.04 (f)(1)(D)(ii)
+      href: https://code.dccouncil.gov/us/dc/council/code/sections/47-1806.04#(f)(1)(D)(ii)
+    - title: Code of the District of Columbia § 47–1806.04 (f)(4)
+      href: https://code.dccouncil.gov/us/dc/council/code/sections/47-1806.04#(f)(4)
+    - title: American Rescue Plan Act of 2021, Pub. L. 117-2, § 9622, 135 Stat. 153
+      href: https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf#page=151
+    - title: 2021 DC Form D-40 Booklet, Page 3, New for 2021, Earned Income Tax Credit
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/52926_D-40_12.21.21_Final_Rev011122.pdf#page=3
+    - title: 2021 DC Form D-40 Booklet, Page 12, Qualifying Child for EITC Purposes
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/52926_D-40_12.21.21_Final_Rev011122.pdf#page=12
+    - title: 2022 DC Form D-40 Booklet, Page 11, Taxpayers with a Qualifying Child
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2022_D-40_Booklet_Final_blk_01_23_23_Ordc.pdf#page=11
+    - title: 2023 DC Form D-40 Booklet, Page 10, Taxpayers with a Qualifying Child
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2023_D40_Book_Final_012324.pdf#page=10
+    - title: 2023 DC Form D-40 Booklet, Page 18, Line 27a
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2023_D40_Book_Final_012324.pdf#page=18
+    - title: 2024 DC Form D-40 Booklet, Page 10, Taxpayers with a Qualifying Child
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2024_D40_Booklet_011525.pdf#page=10
+    - title: 2024 DC Form D-40 Booklet, Page 18, Line 27a
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2024_D40_Booklet_011525.pdf#page=18
+    - title: 2025 DC Form D-40 Booklet, Page 13, Taxpayers with a Qualifying Child
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2025_D40_Book_082026_v1.pdf#page=13
+    - title: 2025 DC Form D-40 Booklet, Page 21, Line 27a
+      href: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2025_D40_Book_082026_v1.pdf#page=21

policyengine_us/tests/policy/baseline/gov/irs/credits/earned_income/eitc_child_count.yaml

@@ -85,3 +85,65 @@
         members: [person1, person2]
   output:
     eitc_child_count: 0
+
+- name: Case 6, disabled parent dependent fails the relationship test.
+  period: 2026
+  input:
+    people:
+      person1:
+        is_tax_unit_head_or_spouse: true
+        meets_eitc_identification_requirements: true
+      person2:
+        age: 75
+        is_permanently_and_totally_disabled: true
+        is_tax_unit_dependent: true
+        is_parent_of_filer_or_spouse: true
+        meets_eitc_identification_requirements: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+  output:
+    # IRC 152(c)(2): a parent is a qualifying relative, not a qualifying child.
+    eitc_child_count: 0
+
+- name: Case 7, disabled grandparent dependent fails the relationship test.
+  period: 2026
+  input:
+    people:
+      person1:
+        is_tax_unit_head_or_spouse: true
+        meets_eitc_identification_requirements: true
+      person2:
+        age: 85
+        is_permanently_and_totally_disabled: true
+        is_tax_unit_dependent: true
+        is_grandparent_of_filer_or_spouse: true
+        meets_eitc_identification_requirements: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+  output:
+    eitc_child_count: 0
+
+- name: Case 8, federal EITC uses the childless schedule for a filer supporting a disabled parent.
+  period: 2023
+  input:
+    people:
+      head:
+        age: 50
+        is_tax_unit_head: true
+        employment_income: 6_000
+      parent:
+        age: 75
+        is_tax_unit_dependent: true
+        is_tax_unit_spouse: false
+        is_permanently_and_totally_disabled: true
+        is_parent_of_filer_or_spouse: true
+    tax_units:
+      tax_unit:
+        members: [head, parent]
+        filing_status: HEAD_OF_HOUSEHOLD
+  output:
+    eitc_child_count: 0
+    # Rev. Proc. 2022-38: 7.65% x 6,000 = 459, not the one-child 34% x 6,000.
+    eitc: 459

policyengine_us/tests/policy/baseline/gov/irs/credits/earned_income/is_eitc_qualifying_child.yaml

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+# IRC 32(c)(3)(A) applies the IRC 152(c) qualifying-child definition: the
+# 152(c)(2) relationship test and the 152(c)(3) age test, which 152(c)(3)(B)
+# waives for a permanently and totally disabled individual. The identification
+# requirement of IRC 32(c)(3)(D) is applied by each credit.
+
+- name: A dependent child under the age limit is an EITC qualifying child.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 40
+        is_tax_unit_head: true
+      child:
+        age: 10
+        is_tax_unit_dependent: true
+  output:
+    is_eitc_qualifying_child: [false, true]
+
+- name: A permanently and totally disabled adult child is an EITC qualifying child.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 55
+        is_tax_unit_head: true
+      adult_child:
+        age: 30
+        is_tax_unit_dependent: true
+        is_tax_unit_spouse: false
+        is_permanently_and_totally_disabled: true
+  output:
+    is_eitc_qualifying_child: [false, true]
+
+- name: A non-disabled adult dependent is not an EITC qualifying child.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 55
+        is_tax_unit_head: true
+      adult_child:
+        age: 30
+        is_tax_unit_dependent: true
+        is_tax_unit_spouse: false
+        is_permanently_and_totally_disabled: false
+  output:
+    is_eitc_qualifying_child: [false, false]
+
+- name: A permanently and totally disabled parent fails the relationship test.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 50
+        is_tax_unit_head: true
+      parent:
+        age: 75
+        is_tax_unit_dependent: true
+        is_tax_unit_spouse: false
+        is_permanently_and_totally_disabled: true
+        is_parent_of_filer_or_spouse: true
+  output:
+    # A parent can be a qualifying relative under IRC 152(d)(2)(C) but never
+    # a qualifying child under IRC 152(c)(2).
+    is_eitc_qualifying_child: [false, false]
+
+- name: A permanently and totally disabled grandparent fails the relationship test.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 50
+        is_tax_unit_head: true
+      grandparent:
+        age: 85
+        is_tax_unit_dependent: true
+        is_tax_unit_spouse: false
+        is_permanently_and_totally_disabled: true
+        is_grandparent_of_filer_or_spouse: true
+  output:
+    is_eitc_qualifying_child: [false, false]
+
+- name: A disabled non-dependent is not an EITC qualifying child.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 50
+        is_tax_unit_head: true
+        is_permanently_and_totally_disabled: true
+  output:
+    is_eitc_qualifying_child: false
+
+- name: The identification requirement is not part of this test.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 40
+        is_tax_unit_head: true
+      child:
+        age: 10
+        is_tax_unit_dependent: true
+        ssn_card_type: NONE
+  output:
+    is_eitc_qualifying_child: [false, true]