Subtract Michigan premiums once and exclude the first $300 of gambling winnings and gifts (MI-1040CR lines 20, 24, 30 and 31)

changelog.d/mi-household-resources-premiums-gambling.fixed.md

@@ -0,0 +1 @@
+Subtract Michigan household resources premiums once (MI-1040CR line 31 leaves out the self-employed health insurance deduction on line 30), and exclude the first $300 of gambling winnings and of gifts (MCL 206.510(1)(a) and (b), lines 20 and 24), counting gifts from relatives and friends on line 24.

policyengine_us/parameters/gov/states/mi/tax/income/household_resources.yaml

@@ -28,9 +28,13 @@ values:
     # MI-1040CR line 19, net capital gains and losses from the filer's U.S.
     # Schedule D, a loss limited to $3,000 ($1,500 married filing separately).
     - filer_loss_limited_net_capital_gains
-    # MI-1040CR line 20, alimony and other taxable income.
+    # MI-1040CR line 20, alimony and other taxable income: "awards, prizes,
+    # lottery, bingo, and other gambling winnings over $300" (the first $300
+    # is household_resources_gambling_exclusion) and other taxable income,
+    # such as miscellaneous_income (26 CFR 1.61-14), in full.
     - alimony_income
     - gambling_winnings
+    - miscellaneous_income
     # MI-1040CR line 21, Social Security, SSI and railroad retirement
     # benefits, including amounts received for dependents.
     - social_security
@@ -40,8 +44,14 @@ values:
     - child_support_received
     # MI-1040CR line 23, unemployment compensation.
     - total_unemployment_compensation
-    # MI-1040CR line 24, gifts received or expenses paid on your behalf.
-    - miscellaneous_income
+    # MI-1040CR line 24, "the value over $300 in gifts of cash or merchandise
+    # received, or expenses paid on your behalf ... by parents, relatives, or
+    # friends" (the first $300 is household_resources_gift_exclusion). Gifts
+    # are excluded from federal gross income (IRC 102) but are total
+    # household resources (MCL 206.510(1)). financial_assistance is cash
+    # only; expenses others pay on the claimant's behalf (gifts in kind) have
+    # no input.
+    - financial_assistance
     # MI-1040CR line 26, veterans' benefits and workers' compensation.
     - veterans_benefits
     - workers_compensation
@@ -74,3 +84,5 @@ metadata:
     href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=26
   - title: Michigan Compiled Laws Chapter 9 Section 206.508 - Definitions. (4)
     href: https://law.justia.com/codes/michigan/2022/chapter-206/statute-act-281-of-1967/division-281-1967-1/division-281-1967-1-9/section-206-508/
+  - title: MCL 206.510(1), "Income" defined
+    href: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-510

policyengine_us/parameters/gov/states/mi/tax/income/household_resources_gambling_exclusion.yaml

@@ -0,0 +1,25 @@
+description: Michigan excludes this amount of awards, prizes, lottery, bingo and other gambling winnings from household resources.
+values:
+  # MCL 206.510(1)(b): a fixed amount in the statute, not indexed. The
+  # MI-1040CR counts winnings "over $300" on line 20, one amount for the
+  # claimant and spouse. The model applies it to gambling_winnings; it has no
+  # separate input for awards and prizes, and one entered as
+  # miscellaneous_income counts in full on line 20.
+  2021-01-01: 300
+metadata:
+  unit: currency-USD
+  period: year
+  label: Michigan household resources gambling winnings exclusion
+  reference:
+    - title: MCL 206.510(1)(b), "The first $300.00 received from awards, prizes, lottery, bingo, or other gambling winnings"
+      href: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-510
+    - title: 2022 MI-1040 Instructions, MI-1040CR line 20
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2022/BOOK_MI-1040.pdf#page=32
+    - title: 2023 MI-1040 Instructions, MI-1040CR line 20
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2023/BOOK_MI-1040.pdf#page=32
+    - title: 2024 MI-1040 Instructions, MI-1040CR line 20
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2024/MI-1040-Instructions.pdf#page=32
+    - title: 2025 MI-1040 Instructions, MI-1040CR line 20
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=32
+    - title: 2025 MI-1040 Instructions, total household resources do not include the first $300 from gambling, bingo, lottery, awards, or prizes
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=27

policyengine_us/parameters/gov/states/mi/tax/income/household_resources_gift_exclusion.yaml

@@ -0,0 +1,23 @@
+description: Michigan excludes this amount of gifts in cash or kind from nongovernmental sources from household resources.
+values:
+  # MCL 206.510(1)(a): a fixed amount in the statute, not indexed. The
+  # MI-1040CR counts "the value over $300 in gifts" on line 24, one amount
+  # for the claimant and spouse.
+  2021-01-01: 300
+metadata:
+  unit: currency-USD
+  period: year
+  label: Michigan household resources gift exclusion
+  reference:
+    - title: MCL 206.510(1)(a), "The first $300.00 of gifts in cash or kind from nongovernmental sources"
+      href: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-510
+    - title: 2022 MI-1040 Instructions, MI-1040CR line 24
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2022/BOOK_MI-1040.pdf#page=32
+    - title: 2023 MI-1040 Instructions, MI-1040CR line 24
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2023/BOOK_MI-1040.pdf#page=32
+    - title: 2024 MI-1040 Instructions, MI-1040CR line 24
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2024/MI-1040-Instructions.pdf#page=32
+    - title: 2025 MI-1040 Instructions, MI-1040CR line 24
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=32
+    - title: 2025 MI-1040 Instructions, total household resources do not include the first $300 in gifts of cash or merchandise
+      href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=27

policyengine_us/tests/policy/baseline/gov/states/mi/tax/income/mi_household_resources.yaml

@@ -1089,6 +1089,273 @@
     # Line 33: 10,000 - 1,000 - 1,000 = 8,000.
     mi_household_resources: 8_000
 
+# Line 31 (2025 MI-1040 book, pages 32 and 33): "insurance premiums you paid
+# for yourself and your family ... Do not include any insurance premiums
+# deducted on lines 21 or 30". Line 30 includes the self-employed health
+# insurance deduction (Schedule 1 line 17), so a premium deducted there is
+# not subtracted again on line 31.
+
+- name: A self-employed claimant's premiums are subtracted once, on line 30
+  period: 2025
+  input:
+    self_employment_income: 50_000
+    is_self_employed: true
+    health_insurance_premiums: 5_000
+    state_code: MI
+  output:
+    # Line 16: Schedule C 50,000.
+    # Line 30: deduction for self-employment tax, half of 50,000 x 0.9235 x
+    # 15.3% = 3,532.39, plus the self-employed health insurance deduction,
+    # the lesser of the 5,000 premiums and the 50,000 net earnings = 5,000.
+    # 8,532.39 in all.
+    # Line 31: premiums of 5,000, less the 5,000 deducted on line 30 = 0.
+    # Line 33: 50,000 - 8,532.39 - 0 = 41,467.61. Subtracting the premiums
+    # on both lines would give 36,467.61.
+    mi_household_resources: 41_467.61
+  absolute_error_margin: 0.01
+
+- name: Premiums above the self-employed health insurance deduction stay on line 31
+  period: 2025
+  input:
+    employment_income_before_lsr: 40_000
+    self_employment_income: 3_000
+    is_self_employed: true
+    health_insurance_premiums: 5_000
+    state_code: MI
+  output:
+    # Line 14: 40,000. Line 16: 3,000.
+    # Line 30: deduction for self-employment tax, half of 3,000 x 0.9235 x
+    # 15.3% = 211.94, plus the self-employed health insurance deduction,
+    # limited to the 3,000 net earnings = 3,000. 3,211.94 in all.
+    # Line 31: premiums of 5,000, less the 3,000 deducted on line 30 = 2,000.
+    # Line 33: 43,000 - 3,211.94 - 2,000 = 37,788.06. The premiums come off
+    # once in all: 3,000 on line 30 and 2,000 on line 31.
+    mi_household_resources: 37_788.06
+  absolute_error_margin: 0.01
+
+- name: A joint return subtracts each spouse's premiums once
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: false
+        self_employment_income: 50_000
+        is_self_employed: true
+        health_insurance_premiums: 5_000
+      person2:
+        age: 44
+        is_tax_unit_head: false
+        is_tax_unit_spouse: true
+        is_tax_unit_dependent: false
+        employment_income_before_lsr: 30_000
+        health_insurance_premiums: 2_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    marital_units:
+      marital_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MI
+  output:
+    # Line 14: 30,000. Line 16: 50,000.
+    # Line 30: 3,532.39 for self-employment tax plus the head's 5,000
+    # self-employed health insurance deduction = 8,532.39. The spouse is not
+    # self-employed, so the spouse's premiums are not on line 30.
+    # Line 31: premiums of 5,000 + 2,000 = 7,000, less the 5,000 deducted on
+    # line 30 = 2,000.
+    # Line 33: 80,000 - 8,532.39 - 2,000 = 69,467.61.
+    mi_household_resources: 69_467.61
+  absolute_error_margin: 0.01
+
+- name: Medicare premiums withheld from Social Security are subtracted once
+  period: 2025
+  input:
+    age: 70
+    social_security_retirement: 20_000
+    health_insurance_premiums: 2_220
+    state_code: MI
+  output:
+    # The form puts Medicare premiums withheld from benefits on line 21:
+    # "Medicare premiums reported on your Social Security or Railroad
+    # Retirement statement should be deducted" (page 32), so line 21 is
+    # 20,000 - 2,220 = 17,780 and line 31 leaves them out. MCL 206.510(1)(h)
+    # excludes "Amounts deducted from monthly social security or railroad
+    # retirement benefits for medicare premiums" from income.
+    # The model enters gross benefits on line 21 and the premiums on line
+    # 31: 20,000 - 2,220. Either way the premiums come off once.
+    # Line 33: 17,780.
+    mi_household_resources: 17_780
+
+# MCL 206.510(1): income does not include "(a) The first $300.00 of gifts in
+# cash or kind from nongovernmental sources" or "(b) The first $300.00
+# received from awards, prizes, lottery, bingo, or other gambling winnings".
+# The MI-1040CR enters "awards, prizes, lottery, bingo, and other gambling
+# winnings over $300" on line 20 and "the value over $300 in gifts of cash or
+# merchandise received, or expenses paid on your behalf ... by parents,
+# relatives, or friends" on line 24 (2025 MI-1040 book, page 32), each once
+# for the claimant and spouse.
+
+- name: Gambling winnings below $300 are not household resources
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    gambling_winnings: 200
+    state_code: MI
+  output:
+    # Line 14: 20,000. Line 20: winnings over $300 = 0.
+    mi_household_resources: 20_000
+
+- name: Gambling winnings of exactly $300 are not household resources
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    gambling_winnings: 300
+    state_code: MI
+  output:
+    # Line 20: 300 - 300 = 0.
+    mi_household_resources: 20_000
+
+- name: Gambling winnings above $300 count over $300
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    gambling_winnings: 1_000
+    state_code: MI
+  output:
+    # Line 20: 1,000 - 300 = 700.
+    # Line 33: 20,000 + 700 = 20,700.
+    mi_household_resources: 20_700
+
+- name: The $300 gambling exclusion applies once to a married couple
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: false
+        employment_income_before_lsr: 20_000
+        gambling_winnings: 200
+      person2:
+        age: 44
+        is_tax_unit_head: false
+        is_tax_unit_spouse: true
+        is_tax_unit_dependent: false
+        gambling_winnings: 200
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    marital_units:
+      marital_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MI
+  output:
+    # Line 20 is one amount for the claimant and spouse: winnings of
+    # 200 + 200 = 400, over $300 = 100.
+    # Line 33: 20,000 + 100 = 20,100.
+    mi_household_resources: 20_100
+
+- name: Gifts below $300 are not household resources
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    financial_assistance: 200
+    state_code: MI
+  output:
+    # Line 24: cash gifts from relatives or friends over $300 = 0.
+    mi_household_resources: 20_000
+
+- name: Gifts of exactly $300 are not household resources
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    financial_assistance: 300
+    state_code: MI
+  output:
+    # Line 24: 300 - 300 = 0.
+    mi_household_resources: 20_000
+
+- name: Gifts above $300 count over $300
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    financial_assistance: 1_000
+    state_code: MI
+  output:
+    # Line 24: 1,000 - 300 = 700. Gifts are excluded from federal gross
+    # income (IRC 102), and total household resources include income
+    # excluded from AGI (MCL 206.510(1)).
+    # Line 33: 20,000 + 700 = 20,700.
+    mi_household_resources: 20_700
+
+- name: The $300 gift exclusion applies once to a married couple
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: false
+        employment_income_before_lsr: 20_000
+        financial_assistance: 250
+      person2:
+        age: 44
+        is_tax_unit_head: false
+        is_tax_unit_spouse: true
+        is_tax_unit_dependent: false
+        financial_assistance: 250
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    marital_units:
+      marital_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MI
+  output:
+    # Line 24: gifts of 250 + 250 = 500, over $300 = 200.
+    # Line 33: 20,000 + 200 = 20,200.
+    mi_household_resources: 20_200
+
+- name: Gambling winnings and gifts each have their own $300 exclusion
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    gambling_winnings: 500
+    financial_assistance: 500
+    state_code: MI
+  output:
+    # Line 20: 500 - 300 = 200. Line 24: 500 - 300 = 200.
+    # Line 33: 20,000 + 200 + 200 = 20,400.
+    mi_household_resources: 20_400
+
+- name: Miscellaneous taxable income counts in full on line 20
+  period: 2025
+  input:
+    employment_income_before_lsr: 20_000
+    miscellaneous_income: 1_000
+    state_code: MI
+  output:
+    # miscellaneous_income is other taxable income (26 CFR 1.61-14), in
+    # federal gross income, so it is not a gift. It is "other taxable
+    # income" on line 20, and the $300 exclusion covers only awards, prizes,
+    # lottery, bingo and other gambling winnings.
+    # Line 33: 20,000 + 1,000 = 21,000.
+    mi_household_resources: 21_000
+
 - name: A supplied self-employed health insurance deduction comes off line 30
   period: 2025
   input: