Count only the claimant and spouse in Michigan household resources (MI-1040CR lines 14-27, 30 and 31)

[MaxGhenis]

Summary

Michigan total household resources (mi_household_resources, used by the homestead property tax credit and the home heating credit) summed every source over all tax unit members. So a dependent's own wages, interest, pensions and capital gains raised the claimant's household resources, and a dependent's Schedule 1 adjustments, such as the deduction for half of self-employment tax, lowered them. MCL 206.508(3) says "'Household' means a claimant and spouse". #9790 fixed this for lines 16 and 17. This PR goes line by line through the rest of the MI-1040CR: lines 14-27, 30 and 31.

Example (2025): a parent with wages of 40,000 and a 17-year-old dependent with 8,000 of wages, 200 of interest and 3,000 of Schedule C income. The model gave 47,988.06: 40,000 + 8,000 + 200, less the dependent's 211.94 self-employment tax deduction. The form gives 40,000.

Main merge and CI follow-up

Merged main at 30192579689d02dde1d04dd305b47e3aee73fa5f into the approved head abff6ae89c7b76b39eb134de059b5c97d686db55 with merge commit afaad539dd882fccae4ee5cf1ead3b53a945bc49. d1143 follow-up head: dd85603c7fc1d5d3e2d8ff431901e7d4e1167d5a. Current head: 08f20a99e95726c9c558047859366f399c136543, a references-only commit on top of it that cites the 2025 MI-1040CR-7 book (see "The law and the forms"). Main includes #9790, #9801, #9795 and #9855. This PR is second in the Michigan chain: #9795 → #9796 → #9840.

• Line 30 keeps Keep federally excluded income in Michigan household resources (MI-1040CR line 30) #9795's gov.states.mi.tax.income.household_resources_adjustments, filtered to deductions still present in gov.irs.ald.deductions, and Count only the claimant and spouse in Michigan household resources (MI-1040CR lines 14-27, 30 and 31) #9796's tax_unit_non_dep_add claimant-and-spouse summation. The list includes educator_expense_ald, capped per eligible educator. Federal income exclusions stay in Michigan resources.
• All 48 household-resources YAML cases are retained: 33 from the earlier main merge plus 15 from this PR. Expected values are unchanged. Arithmetic remains in the comments: educator expenses produce 50,000 − 300 = 49,700, including expenses above the cap; the mixed exclusion/adjustment case produces 53,000 − 3,300 − 1,200 = 48,500.
• Use the filers' Schedule D for the tax on net capital gain #9855's filer Schedule D lines, distribution floors, tax-unit aggregate input support, federal capital-gain cases, and Vermont and Hawaii cases are retained. filer_loss_limited_net_capital_gains now reads the shared filer Schedule D line 16, which also feeds the Schedule D worksheet and routing. Michigan's line 19 and Form 1040 line 7a therefore apply their capital-loss limit to the same filer amount.
• The dependent investment-income failure comes from float32 rounding when summing all members' capital gains and then subtracting the dependents' amounts. The helper compares net_capital_gains with the ordinary computed all-member aggregate at the aggregate's storage precision. When they match, line 16 uses the filers' short- and long-term components directly. When they differ, line 16 starts from the supplied aggregate, subtracts the dependents' long- and short-term gains separately, and adds the filers' distributions. Each filer's distributions are floored separately.
• The supplied-aggregate convention remains unchanged: it represents all members' net gains before distributions. An aggregate equal to the ordinary computed value uses the direct filer components. A differing aggregate can make line 16 differ from component-derived lines 7 plus 15, so statutory net capital gain and the worksheet may differ for inconsistent aggregate/component inputs; the existing Use the filers' Schedule D for the tax on net capital gain #9855 behavior is preserved.

Michigan retirement invariant: intended exception (d1143)

Max ruled d1143 on 2026-10-09 to follow the form. MI-1040CR lines 18 and 21 (2025 booklet, PDF page 28 / printed page 32) count pensions only for the claimant and spouse, but include SSI received for dependent adults who live with them. A dependent adult's pension can therefore lower their SSI, reduce Michigan household resources, and increase the claimant's refundable heating credit. This is intended.

The retirement invariant now exempts Michigan only from the assertion that dependent retirement income never lowers net state income tax. Every other state's assertion remains strict. Michigan still must preserve claimant AGI, taxable income, pension benefits, subtractions and tax before refundable credits; units without dependent income must remain unchanged.

A paired 2025 YAML regression computes actual SSI for a dependent adult with zero or $2,400 of pension: SSI falls from $11,604 to $9,444 because $2,400 − 12 × $20 = $2,160 is countable unearned income. Household resources fall from $21,604 to $19,444. The standard heating allowance is $815 less 3.5% of household resources, producing $58.86 and $134.46. Applying the 2025 60% funding factor gives heating credits of $35.316 and $80.676, reducing net Michigan tax by $45.36 ($2,160 × 3.5% × 60%). Claimant AGI remains $10,000; pension benefit, subtractions, taxable income and tax before refundable credits remain zero.

The d1143 follow-up changes tests, not Michigan formulas. The PR remains draft.

Validation

Validation tree: dd85603c7fc1d5d3e2d8ff431901e7d4e1167d5a, following 27ffb3b8c2d20ccc9ab4889ba56598c34901fba1. The retirement and EITC invariants and the household-resources and homestead YAMLs passed on b09d151287e33eedf519305f811382c0aff25bd6. The subsequent correction changes only two inputs in the new home-heating fixture; those earlier test files and all model formulas are unchanged. The final home-heating and capital-gain results below refer to dd85603c7fc1d5d3e2d8ff431901e7d4e1167d5a. The requested matrix runs as single files in the foreground, one process at a time. Local validation uses Python 3.13.9 and policyengine-core 3.32.15.

Final matrix: 85 passed across six files.

Test group	Cases	Results
Dependent-retirement invariant	4	4 passed
Dependent EITC investment-income invariant	3	3 passed
Michigan household-resources YAML	48	48 passed
Michigan homestead credit YAML	2	2 passed
Michigan home-heating credit YAML	12, including the paired d1143 case	12 passed
Capital-gain YAML	16, including all 6 capital-gain regressions	16 passed

retirement: 35.05 s reported by pytest (1612.47 s wall); eitc: 1158.61 s reported by pytest (1756.53 s wall); resources: 155.20 s reported by pytest (2002.94 s wall); homestead: 51.95 s reported by pytest (1870.58 s wall); heating: 85.40 s reported by pytest (1729.76 s wall); capital: 39.14 s reported by pytest (877.77 s wall). Startup was slow under host load. The retirement timing helper could not read a sandbox-restricted system metric after pytest passed; subsequent commands use portable elapsed timing. Peak RSS is unavailable.

• make format, Ruff formatting and lint, and git diff --cached --check: passed.
• Existing expected outputs were preserved; partner contract tests were not edited.

The initial home-heating attempt had 11 passed and 1 failed: supplying zero SSI for the heads initialized the whole person input array to zero, bypassing the dependents' SSI formulas. The fixture now computes SSI with explicit take-up flags for all four people; its expected outputs are unchanged. The failed attempt is retained as diagnostic evidence.

08f20a99e9 changes only the reference tuple of mi_household_resources and one reference in household_resources_all_members.yaml. mi_household_resources.yaml passed 48 of 48 on it (policyengine-core 3.32.15). No folder or full-suite runs were done for these follow-ups. The microsimulation impact at the current head is in "Hub microsimulation impact (current head)" below.

The law and the forms

MCL 206.508 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-508): "(3) 'Household' means a claimant and spouse. (4) 'Total household resources' means all income received by all persons of a household in a tax year while members of a household, ..."

MCL 206.510(1) (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-510): "'Income' means the sum of federal adjusted gross income ... plus all income specifically excluded or exempt ... Also, a person who is enrolled in an accident or health insurance plan may deduct from income the amount that person paid in premiums in the tax year for that insurance plan for the person's family."

2025 MI-1040 book (https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf):

• Page 26: "Total household resources are the total income (taxable and nontaxable) of both spouses or of a single person maintaining a household."
• Page 31, before line 14: "Include all taxable and nontaxable income you and your spouse received in 2025."
• Page 32, lines 21, 22, 24, 27 and 30:
  • Line 21: "Enter all Social Security, Supplemental Security Income (SSI), and/or Railroad Retirement benefits. Include death benefits and amounts received for minor children or other dependent adults who live with you."
  • Line 22: "Enter child support and all payments received as a foster parent."
  • Line 24: "... This includes the amount of financial support you received if you are claimed as a dependent on someone else's return."
  • Line 27: "Enter the total payments made to your household by MDHHS and all other public assistance payments such as state adoption subsidies."
  • Line 30: "Enter total adjustments from your U.S. Form 1040, Schedule 1."
• Pages 32-33, line 31: "Enter health insurance premiums, Health Maintenance Organization (HMO) premiums, or other insurance premiums you paid for yourself and your family."

The 2025 MI-1040CR-7 book (home heating credit) has the same text on whose income counts. michigan.gov has removed it (TY2025/MI-1040CR-7-Book.pdf returns 404), so the PR cites the Wayback Machine copy of 2026-02-18. It is byte-identical to the NBER TAXSIM mirror (sha256 f540a3dd…). Page 4 has "the total income (taxable and nontaxable) of both spouses or of a single person maintaining a household", and page 8 has "Include all taxable and nontaxable income you and your spouse received in 2025." Its resources are on lines 17-35, so MI-1040CR lines 21, 22, 24, 27 and 30 are CR-7 lines 24, 25, 27, 30 and 32 (page 9), with the same wording. The 2024 CR-7 book has the same text on lines 26, 27, 29, 32 and 34.

Line by line

MI-1040CR line	PolicyEngine sources	Whose amounts count	Before
14 wages, strike pay, long-term disability	irs_employment_income, strike_benefits, disability_benefits	claimant and spouse	all members
15 interest and dividends	interest_income, dividend_income	claimant and spouse	all members
16 business income	as #9790	claimant and spouse (#9790)
17 rents and royalties	as #9790	claimant and spouse (#9790)
18 pensions and annuities	pension_income, retirement_benefits_from_ss_exempt_employment	claimant and spouse	all members
19 capital gains, "from your U.S. Schedule D"	filer_loss_limited_net_capital_gains (was loss_limited_net_capital_gains)	claimant and spouse	all members
20 alimony, other taxable income	alimony_income, gambling_winnings	claimant and spouse	all members
21 Social Security, SSI, railroad retirement	social_security, ssi, railroad_benefits	every member: "amounts received for minor children or other dependent adults who live with you"	unchanged
22 child support, foster parent payments	child_support_received	every member: child support is received for the children, whoever's record holds it	unchanged
23 unemployment compensation	unemployment_compensation	claimant and spouse	all members
24 gifts and support received	miscellaneous_income	claimant and spouse. The dependent sentence is about a claimant who is someone else's dependent, i.e. this tax unit's head	all members
25 other nontaxable income	gi_cash_assistance (guaranteed income pilot payments)	claimant and spouse: nothing shows a pilot payment is public assistance paid to the household	all members
26 workers' compensation, VA benefits	veterans_benefits, workers_compensation	claimant and spouse	all members
27 MDHHS and other public assistance	tanf, general_assistance	every member: "payments made to your household". A FIP grant covers the children in the case, and tanf is an SPM-unit amount that reaches the tax unit in per-person shares, so counting only the head's share would drop the children's part of the grant	unchanged
30 Schedule 1 adjustments	gov.states.mi.tax.income.household_resources_adjustments, filtered by gov.irs.ald.deductions; includes capped educator_expense_ald	claimant and spouse ("your U.S. Form 1040, Schedule 1"). The tax-unit totals are read as they are, so supplied amounts and reforms are kept; #9801 makes them leave dependents out	all members
31 health insurance premiums	health_insurance_premiums	every member: "for yourself and your family"; MCL 206.510(1) "for the person's family"	unchanged

Changes

• mi_household_resources:
  • sums each source over the head and spouse with tax_unit_non_dep_add (from Leave dependents' investment income out of the filer's NIIT base #9784). A tax-unit-level source is taken as it is. This replaces Net Michigan business and rental losses in household resources (MI-1040CR lines 16, 17 and 30) #9790's own mask for lines 16 and 17.
  • sums the sources in the new parameter gov.states.mi.tax.income.household_resources_all_members over every member with add. These are lines 21, 22 and 27: amounts the claimant receives for others in the household. So is a source defined for a group larger than the tax unit, such as an SPM unit amount, so a reform can't hit an entity error.
  • line 30 sums the Michigan Schedule 1 adjustment list from Keep federally excluded income in Michigan household resources (MI-1040CR line 30) #9795 through tax_unit_non_dep_add. A supplied input or a reform of self_employment_tax_ald or another aggregate is respected. Keep dependents' above-the-line deductions off the filer's AGI #9801 (now on main) makes those aggregates leave dependents out.
  • leaves line 31 unchanged.
• gov.states.mi.tax.income.household_resources:
  • Line 19 is filer_loss_limited_net_capital_gains (the head and spouse's Schedule D, with the same netting and loss limit).
  • gi_cash_assistance counts only for the claimant and spouse: nothing shows that a pilot payment is public assistance paid to the claimant's household.
  • Each source has an MI-1040CR line comment.
• filer_loss_limited_net_capital_gains (read by Michigan and by net investment income) reads the filers' Schedule D line 16 from Use the filers' Schedule D for the tax on net capital gain #9855's shared filer_schedule_d_lines, then applies the capital-loss limit. Capital gain distributions are floored separately for each filer. A net_capital_gains amount matching the ordinary computed all-member aggregate at its storage precision uses the head and spouse's components directly, preventing a dependent's large gains from introducing rounding changes. For a differing supplied aggregate, the helper subtracts dependent long- and short-term gains separately from that supplied amount before adding the filers' distributions. It does not reconstruct the supplied amount through a residual against the rounded computed aggregate. Tax-unit inputs remain supported: wages 10,000 plus a supplied 5,000 give 15,000, and a supplied −5,000 is limited to −3,000.
• References: MCL 206.510 and page 33 of the 2025 book.

Tests

Six new deterministic cases in net_capital_gain.yaml cover the shared Schedule D calculation:

• A head with a 977 gain and a dependent with 16,776,240 retains 977 on Form 1040 line 7a, statutory net capital gain and the worksheet. The float32 all-member aggregate rounds 16,777,217 to 16,777,216; subtracting the dependent previously gave 976.
• Spouses' distributions of −2,000 and 1,500 are floored separately. With long-term gains of 6,000 and short-term losses of −3,000, line 16 is 4,500; the dependent's gains and distributions are excluded.
• A supplied all-member aggregate of 15,000 removes the dependent's 8,000 net gain and adds the head's 1,500 distributions, producing line 16 of 8,500. Component-derived statutory gain remains 6,500 and worksheet gain 7,500, preserving Use the filers' Schedule D for the tax on net capital gain #9855's documented aggregate/component split.
• A supplied aggregate of 16,777,216 with a filer component of −1 remains 16,777,216. Directly reading the supplied amount avoids losing a dollar through a float32 residual.
• A supplied aggregate of 20,000,000 with dependent gains of 16,776,240 gives line 16 of 3,223,760. The rounded computed aggregate cannot add an extra dollar to this override.
• A supplied aggregate of 1 remains 1 even when the filer's component gain is 2**60. Reconstructing it through even a float64 residual would lose the supplied dollar.

mi_household_resources.yaml: 15 claimant-and-spouse cases plus the 33 now on main (48 in all), with MI-1040CR line comments and expected values worked out from the form. The "was" values come from running the cases on #9790's head b6c5f613ce, where 6 fail. The 3 guards pass on both:

• a working dependent: wages 8,000, interest 200 and Schedule C 3,000; the dependent's self-employment tax deduction stays off line 30. 40,000 (was 47,988.06).
• Social Security survivors benefits paid for a 10-year-old (line 21), with the child's own interest left out. 39,000 (was 39,400).
• both spouses' income counts and a child's does not. 50,500 (was 51,500).
• a dependent parent: Social Security counts, pension does not. 65,000 (was 71,000).
• a dependent's capital loss does not reduce the claimant's line 19. 52,000 (was 47,000).
• a dependent's early withdrawal penalty is not on line 30. 49,000 (was 48,500).
• three unchanged-behavior guards: SSI and child support for a child (lines 21 and 22), a FIP grant for a parent and two children (line 27), and premiums for a child's coverage (line 31).
• a dependent's deductible alimony is not on the claimant's line 30 (40,000); guaranteed income pilot payments count only for the claimant and spouse (41,000).
• supplied tax unit amounts: a net_capital_gains input of 5,000 counts on line 19 (15,000), and one of −5,000 is limited to −3,000 (7,000). Both fail on the r1 code. Supplied self_employment_tax_ald and self_employed_pension_contribution_ald amounts come off line 30 (8,000), as does a supplied self_employed_health_insurance_ald (9,000). dependent_net_investment_income.yaml adds a case where a supplied net_capital_gains of 100,000 is net investment income.
• "Cannot be negative", "Reduced to 0" and "Partially reduced" set long_term_capital_gains in place of the tax-unit net_capital_gains and keep their expected values. The new cases above cover the supplied amount.

test_mi_household_resources_members.py: a deterministic test of every source on a child and on a dependent parent, a spouse test, and Hypothesis tests. Households have a head, an optional spouse, and 0-2 dependents aged 10, 16 or 75, with sparse random amounts of 26 inputs and a random FIP grant. Invariants, for every household:

1. mi_household_resources equals a reference written from the form: max(0, the head and spouse's lines 14-20 and 23-26 + every member's lines 21, 22 and 27 − the head and spouse's line 30 − every member's premiums). Lines 16, 17 and 19 net and floor as the form does. This is a differential test against the form.
2. A dependent's own income and adjustments do not matter: zeroing them leaves household resources unchanged.
3. Amounts received for the household count wherever they are recorded: moving a dependent's line 21, 22 or 27 amount, or premium, to the head leaves household resources unchanged.
4. Raising a dependent's line 21, 22 or 27 amount by d raises household resources by between 0 and d, and by exactly d when they were positive.
5. Each of the spouse's own sources adds what it adds on the head.

The first Hypothesis counterexample was a test gap, not a model error. In a household with no income, the model computes a FIP grant, which counts on line 27, but the reference had left it out. The SPM unit's tanf is now an input.

Historical validation on head b10ac14936 (before #9795), one process at a time:

• YAML: Michigan 628 passed, IRS 1,517 passed.
• Python: the two Michigan property files, the Leave dependents' investment income out of the filer's NIIT base #9784 and Keep dependents' losses off the filer's AGI #9647 dependent invariants and test_capital_gain_distributions_loss_limit.py (43 passed); Keep dependents' above-the-line deductions off the filer's AGI #9801's test_ald_determinism.py and dependent ALD invariants (13 passed).

Hub microsimulation impact (current head)

A real microsimulation on the default dataset, main at the merge base 3019257968 against this PR's head 08f20a99e9, for 2025 and 2026. The runs went one at a time under the shared heavy-job lock. Sums are weighted.

Output	2025 change	2026 change	2025 records changed (weighted)	2026 records changed (weighted)
mi_household_resources	-6.33bn	-6.59bn	126 (423,983)	126 (427,011)
mi_refundable_credits	+12.75M	+10.60M	22 (84,483)	21 (77,146)
mi_income_tax	-12.75M	-10.60M	22 (84,483)	21 (77,146)
mi_homestead_property_tax_credit	+4.41M	+2.65M	7 (21,068)	6 (13,279)
mi_home_heating_credit	+8.34M	+7.94M	16 (66,611)	16 (67,086)
filer_loss_limited_net_capital_gains	+0	+0	0 (0)	0 (0)
net_investment_income_tax	+0	+0	0 (0)	0 (0)
adjusted_gross_income	+0	+0	0 (0)	0 (0)
state_income_tax	-12.75M	-10.60M	22 (84,483)	21 (77,146)
income_tax	+0	+0	0 (0)	0 (0)
household_net_income	+12.75M	+10.60M	22 (84,483)	21 (77,146)
household_benefits	+0	+0	0 (0)	0 (0)

08f20a99e9 differs from the d1143 follow-up head dd85603c7f only in references. The Michigan figures match the earlier approved-head estimate (abff6ae89c, below) at the precision shown. Household resources fall in all 126 changed units, and every changed credit rises. The refundable-credit change equals the homestead plus home heating changes up to float32 rounding: $4,414,000 + $8,336,907 = $12,750,907 against $12,750,904 in 2025, and $2,651,825 + $7,943,936 = $10,595,762 against $10,595,763 in 2026. The federal capital-gain follow-ups (78a463146, 27ffb3b8c) change no record on the default dataset: filer_loss_limited_net_capital_gains, net_investment_income_tax, adjusted_gross_income and income_tax are identical record by record in both years. Each side-year ran under the shared heavy-job lock with a 20 GB footprint cap; peak footprint was 14.3 GB.

Comparison files are in fixes/9796-impact/ on the hub host.

Historical hub microsimulation impact (approved head abff6ae, superseded)

Historical results on the default dataset, main at the earlier merge base 0a8c3c2c43 against approved head abff6ae89c, for 2025 and 2026. These estimates predate the latest main merge and CI follow-ups. "Hub microsimulation impact (current head)" above supersedes them, with the same Michigan totals. The original runs went one at a time under the shared heavy-job lock. Sums are weighted.

Output	2025 change	2026 change	2025 records changed (weighted)	2026 records changed (weighted)
mi_household_resources	-6.33bn	-6.59bn	126 (423,983)	126 (427,011)
mi_refundable_credits	+12.75M	+10.60M	22 (84,483)	21 (77,146)
mi_income_tax	-12.75M	-10.60M	22 (84,483)	21 (77,146)
mi_homestead_property_tax_credit	+4.41M	+2.65M	7 (21,068)	6 (13,279)
mi_home_heating_credit	+8.34M	+7.94M	16 (66,611)	16 (67,086)
state_income_tax	-12.75M	-10.60M	22 (84,483)	21 (77,146)
income_tax	+0	+0	0 (0)	0 (0)
household_net_income	+12.75M	+10.60M	22 (84,483)	21 (77,146)
household_benefits	+0	+0	0 (0)	0 (0)

Excluding dependents' income lowers household resources on all 126 changed units, and every changed credit record rises. The refundable-credit increase equals the homestead plus home heating increases in each year: $4.41M + $8.34M = $12.75M in 2025.

Earlier historical microsimulation (default dataset, 2026)

Historical impact, superseded: this section predates #9795 and the main merge above. The figures are kept as originally measured. The later approved-head estimate is "Historical hub microsimulation impact (approved head abff6ae, superseded)"; both are superseded by "Hub microsimulation impact (current head)" above.

Base: #9790's head 0a2ca21b4a merged with #9801 at 1a97062090, which is everything here except this PR's own change. Branch: b10ac14936. The two ran one at a time under the shared heavy-job lock and a 24 GB watchdog (peak 15.4 GB) on populace_us_2024.h5@populace-us-2024-spm-20260909: 79,729 tax units, 1,974 in Michigan.

	base	branch	change
mi_household_resources (weighted)	$521.54B	$513.50B	−$8.04B: −$8.036B in 109 Michigan units, all with a dependent
mi_homestead_property_tax_credit	$801.9M	$802.9M	+$1.02M (6 Michigan units)
mi_home_heating_credit	$172.4M	$177.1M	+$4.68M: +$4.53M in 9 Michigan units
mi_refundable_credits	$1,592.2M	$1,597.9M	+$5.70M: +$5.55M in 15 Michigan units
mi_income_tax / state_income_tax			−$5.70M: −$5.55M in 15 Michigan units
mi_eitc, adjusted_gross_income, loss_limited_net_capital_gains			0

• The totals also include 2 tax units that the measurement script leaves without a state, because it takes a unit's state from a flagged head. Between them they net −$7.2M of household resources and +$0.15M of credits.
• Household resources fall for all 109 changed Michigan units; none rises. Each has a dependent whose own income no longer counts. The unweighted median change is −$7,529 (p10 −$51,628, p90 −$290).
• On that historical head, filer_loss_limited_net_capital_gains differed in 31 units by at most $0.03 (one float32 spacing; −$977 weighted on $1.63T), from its summation order. income_tax differed by less than a cent in one unit. The current precision fix removes the computed-gain dependence on the dependents' amounts; these historical measurements do not validate the follow-up head.

Coordination

• Keep federally excluded income in Michigan household resources (MI-1040CR line 30) #9795 is now on main. The main merge keeps its Schedule 1 adjustment list (including capped educator expenses, excluding savings-bond, adoption, possession and Puerto Rico exclusions) with this PR's head-and-spouse summation. Subtract Michigan premiums once and exclude the first $300 of gambling winnings and gifts (MI-1040CR lines 20, 24, 30 and 31) #9840 follows this PR for the remaining Michigan fixes.
• Federal: Keep dependents' above-the-line deductions off the filer's AGI #9801 is now on main and included in this merge. It also fixes Net Michigan business and rental losses in household resources (MI-1040CR lines 16, 17 and 30) #9790's interim error: a dependent's positive Schedule C income no longer lowers the claimant's resources through the self-employment tax deduction. The members tests pin that. Use the filers' Schedule D for the tax on net capital gain #9855 supplies the shared filer Schedule D helper used by this follow-up.

Not in this PR (follow-ups, sent to the US + core hub)

• Line 31 premiums already deducted on line 30, and the $300 exclusions in MCL 206.510(1)(a) and (b): a follow-up PR on branch mi-household-resources-premiums-gambling, stacked on this one. It also maps miscellaneous_income (taxable other income) to line 20 and gifts (financial_assistance) to line 24.
• Foster parent payments (line 22) and Schedule E Part IV REMIC income (line 17) have no input.

axiom: TheAxiomFoundation/rulespec-us#1491 queued (extended for MCL 206.508(3), household = claimant and spouse; the signed encoder run needs approval)

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[MaxGhenis]

Hand-off back to the US + core hub (from session local_cd1d9b85, a second launch of chip task_9cba9253; it did not rebuild this PR)

• Head: 08f20a99e95726c9c558047859366f399c136543, a references-only commit on the d1143 follow-up head dd85603c7f. It cites the 2025 MI-1040CR-7 book, which michigan.gov has removed, using a Wayback copy that is byte-identical to the NBER TAXSIM mirror. That book scopes household resources the same way as the 2025 MI-1040CR, so no formula or test changed.
• Tests: mi_household_resources.yaml 48/48 on 08f20a99e9. The 85-test matrix for dd85603c7f is in the body.
• Impact at 08f20a99e9 (default dataset, 2025 and 2026; in the body): mi_household_resources −$6.33bn / −$6.59bn, mi_refundable_credits +$12.75M / +$10.60M. These match the earlier approved-head estimate. filer_loss_limited_net_capital_gains, net_investment_income_tax, adjusted_gross_income and income_tax are identical record by record.
• Axiom: Encode MCL 206.508(4) Michigan total household resources (net business and rental loss add-backs) TheAxiomFoundation/rulespec-us#1491 is queued; I added a 2025 CR-7 cross-check comment.
• Pending (hub): the Sol delta review from approved head abff6ae89c to 08f20a99e9, then ready for review, CI and landing. Subtract Michigan premiums once and exclude the first $300 of gambling winnings and gifts (MI-1040CR lines 20, 24, 30 and 31) #9840 follows.

[MaxGhenis]

US + core hub merge audit, us#9796 at 08f20a99e95726c9c558047859366f399c136543 (squash): Michigan household resources count only the claimant and spouse (MCL 206.508(3); MI-1040CR lines 14-27, 30 and 31).

• Review: independent GPT-6.1 Sol delta review r5 approves this exact head, covering abff6ae through 08f20a9.
  • That range holds the main merge, the shared filer Schedule D lines (which fixed a $1 drift against Use the filers' Schedule D for the tax on net capital gain #9855), the d1143 dependent pension/SSI exception, and the 2025 MI-1040CR-7 citation.
  • The methodology choice is Max's d1143 ruling ("follow the form").
• Gates checked live at merge:
  • gh pr checks exits 0;
  • the latest Pull request run at the head concluded success;
  • MERGEABLE, not a draft, no CHANGES_REQUESTED;
  • the semantic-overlap guard;
  • head pinned.
• Impact: a hub microsim at this head (merge base 3019257968), for 2025 and 2026.
  • mi_household_resources falls $6.33B and $6.59B (126 units).
  • mi_income_tax falls $12.75M and $10.60M, as refundable credits rise.
  • AGI and filer capital gains are unchanged.
• Axiom: rulespec-us#1491 queued.
• --admin: used only because a required approving review is the sole block.