Align Montana separate-filing deductions and the elderly credit's income with the forms

changelog.d/fix-mt-separate-filing-allocations.fixed.md

@@ -0,0 +1 @@
+Montana's child and dependent care expense deduction and the charitable deduction used to test federal itemization now divide a couple's amount between spouses filing separately on the same form with the itemized-deduction spouse allocation rate parameter, as the actual itemized deduction already does, rather than a hard-coded half.

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/cdcc/mt_child_dependent_care_expense_deduction.yaml

@@ -749,3 +749,35 @@
     # is not filing, you cannot qualify for this deduction."
     mt_child_dependent_care_expense_deduction: [0, 0]
     mt_child_dependent_care_expense_deduction_joint: 0
+
+- name: Case 29, reforming the spouse allocation rate changes each column but not the joint deduction
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    gov.states.mt.tax.income.deductions.itemized.spouse_allocation_rate: 0.25
+    people:
+      person1:
+        is_tax_unit_head: true
+        mt_agi_indiv: 9_000
+      person2:
+        is_tax_unit_spouse: true
+        mt_agi_indiv: 9_000
+      person3:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+        tax_unit_childcare_expenses: 2_400
+        mt_agi_joint: 18_000
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: MT
+  output:
+    # At combined AGI 18_000 the full 2_400 expense is deductible.
+    # Reforming the allocation rate gives each column 2_400 * 0.25 = 600;
+    # the joint return still claims the full deduction.
+    # Columns sum to the joint amount only at the default allocation rate of 0.5.
+    mt_child_dependent_care_expense_deduction: [600, 600, 0]
+    mt_child_dependent_care_expense_deduction_joint: 2_400

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/federal_itemization/mt_itemized_deductions_for_federal_itemization_indiv.yaml

@@ -115,3 +115,222 @@
     # (2023 Form 2 instructions, p. 13), so the joint federal amount is used.
     deductible_mortgage_interest: [22_500, 7_500]
     mt_itemized_deductions_for_federal_itemization_indiv: [22_500, 7_500]
+
+- name: Charitable allocation agrees across separate paths at default half share
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 30
+        is_tax_unit_head: true
+        employment_income: 2_000
+      spouse:
+        age: 30
+        is_tax_unit_spouse: true
+        employment_income: 2_000
+      dependent:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, dependent]
+    households:
+      household:
+        members: [head, spouse, dependent]
+        state_code: MT
+    axes:
+      - - name: charitable_cash_donations
+          count: 3
+          min: 0
+          max: 800
+          index: 0
+  output:
+    # Donations of 0, 400 and 800 are below the charitable AGI cap.
+    # Income is below both federal taxable income and MT withholding thresholds,
+    # so the aggregates contain only charity; the two separate paths must agree.
+    charitable_deduction: [0, 400, 800]
+    mt_federal_income_tax_deduction_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_federal_income_tax_deduction_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Each spouse receives 0.5 times charity; dependents receive zero.
+    mt_itemized_deductions_indiv: [0, 0, 0, 200, 200, 0, 400, 400, 0]
+    mt_itemized_deductions_for_federal_itemization_indiv: [0, 0, 0, 200, 200, 0, 400, 400, 0]
+    # Joint charity remains intact regardless of the separate allocation rate.
+    mt_itemized_deductions_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+
+- name: Charitable allocation agrees across separate paths at reformed share 0
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    gov.states.mt.tax.income.deductions.itemized.spouse_allocation_rate: 0
+    people:
+      head:
+        age: 30
+        is_tax_unit_head: true
+        employment_income: 2_000
+      spouse:
+        age: 30
+        is_tax_unit_spouse: true
+        employment_income: 2_000
+      dependent:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, dependent]
+    households:
+      household:
+        members: [head, spouse, dependent]
+        state_code: MT
+    axes:
+      - - name: charitable_cash_donations
+          count: 3
+          min: 0
+          max: 800
+          index: 0
+  output:
+    # Donations of 0, 400 and 800 are below the charitable AGI cap.
+    # Income is below both federal taxable income and MT withholding thresholds,
+    # so the aggregates contain only charity; the two separate paths must agree.
+    charitable_deduction: [0, 400, 800]
+    mt_federal_income_tax_deduction_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_federal_income_tax_deduction_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Each spouse receives 0 times charity; dependents receive zero.
+    mt_itemized_deductions_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Joint charity remains intact regardless of the separate allocation rate.
+    mt_itemized_deductions_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+
+- name: Charitable allocation agrees across separate paths at reformed share 0.25
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    gov.states.mt.tax.income.deductions.itemized.spouse_allocation_rate: 0.25
+    people:
+      head:
+        age: 30
+        is_tax_unit_head: true
+        employment_income: 2_000
+      spouse:
+        age: 30
+        is_tax_unit_spouse: true
+        employment_income: 2_000
+      dependent:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, dependent]
+    households:
+      household:
+        members: [head, spouse, dependent]
+        state_code: MT
+    axes:
+      - - name: charitable_cash_donations
+          count: 3
+          min: 0
+          max: 800
+          index: 0
+  output:
+    # Donations of 0, 400 and 800 are below the charitable AGI cap.
+    # Income is below both federal taxable income and MT withholding thresholds,
+    # so the aggregates contain only charity; the two separate paths must agree.
+    charitable_deduction: [0, 400, 800]
+    mt_federal_income_tax_deduction_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_federal_income_tax_deduction_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Each spouse receives 0.25 times charity; dependents receive zero.
+    mt_itemized_deductions_indiv: [0, 0, 0, 100, 100, 0, 200, 200, 0]
+    mt_itemized_deductions_for_federal_itemization_indiv: [0, 0, 0, 100, 100, 0, 200, 200, 0]
+    # Joint charity remains intact regardless of the separate allocation rate.
+    mt_itemized_deductions_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+
+- name: Charitable allocation agrees across separate paths at reformed share 0.75
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    gov.states.mt.tax.income.deductions.itemized.spouse_allocation_rate: 0.75
+    people:
+      head:
+        age: 30
+        is_tax_unit_head: true
+        employment_income: 2_000
+      spouse:
+        age: 30
+        is_tax_unit_spouse: true
+        employment_income: 2_000
+      dependent:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, dependent]
+    households:
+      household:
+        members: [head, spouse, dependent]
+        state_code: MT
+    axes:
+      - - name: charitable_cash_donations
+          count: 3
+          min: 0
+          max: 800
+          index: 0
+  output:
+    # Donations of 0, 400 and 800 are below the charitable AGI cap.
+    # Income is below both federal taxable income and MT withholding thresholds,
+    # so the aggregates contain only charity; the two separate paths must agree.
+    charitable_deduction: [0, 400, 800]
+    mt_federal_income_tax_deduction_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_federal_income_tax_deduction_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Each spouse receives 0.75 times charity; dependents receive zero.
+    mt_itemized_deductions_indiv: [0, 0, 0, 300, 300, 0, 600, 600, 0]
+    mt_itemized_deductions_for_federal_itemization_indiv: [0, 0, 0, 300, 300, 0, 600, 600, 0]
+    # Joint charity remains intact regardless of the separate allocation rate.
+    mt_itemized_deductions_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+
+- name: Charitable allocation agrees across separate paths at reformed share 1
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    gov.states.mt.tax.income.deductions.itemized.spouse_allocation_rate: 1
+    people:
+      head:
+        age: 30
+        is_tax_unit_head: true
+        employment_income: 2_000
+      spouse:
+        age: 30
+        is_tax_unit_spouse: true
+        employment_income: 2_000
+      dependent:
+        age: 10
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [head, spouse, dependent]
+    households:
+      household:
+        members: [head, spouse, dependent]
+        state_code: MT
+    axes:
+      - - name: charitable_cash_donations
+          count: 3
+          min: 0
+          max: 800
+          index: 0
+  output:
+    # Donations of 0, 400 and 800 are below the charitable AGI cap.
+    # Income is below both federal taxable income and MT withholding thresholds,
+    # so the aggregates contain only charity; the two separate paths must agree.
+    charitable_deduction: [0, 400, 800]
+    mt_federal_income_tax_deduction_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    mt_federal_income_tax_deduction_for_federal_itemization_indiv: [0, 0, 0, 0, 0, 0, 0, 0, 0]
+    # Each spouse receives 1 times charity; dependents receive zero.
+    mt_itemized_deductions_indiv: [0, 0, 0, 400, 400, 0, 800, 800, 0]
+    mt_itemized_deductions_for_federal_itemization_indiv: [0, 0, 0, 400, 400, 0, 800, 800, 0]
+    # Joint charity remains intact regardless of the separate allocation rate.
+    mt_itemized_deductions_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]
+    mt_itemized_deductions_for_federal_itemization_joint: [0, 0, 0, 400, 0, 0, 800, 0, 0]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction_indiv.yaml

@@ -103,6 +103,32 @@
     mt_federal_income_tax_deduction_share: [1, 0, 0]
     mt_federal_income_tax_deduction_indiv: [2_000, 0, 0]
 
+- name: A spouse's negative federal AGI cannot produce a negative tax share
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 60_000
+      person2:
+        age: 40
+        self_employment_income: -20_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        state_filing_status_if_married_filing_separately_on_same_return: SEPARATE
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # The spouse's federal AGI is negative. Only positive AGI draws a
+    # share of the couple's 1_410 federal income tax.
+    income_tax_before_refundable_credits: 1_410
+    mt_federal_income_tax_deduction_share: [1, 0]
+    mt_federal_income_tax_deduction_indiv: [1_410, 0]
+
 - name: No positive filer income retains main's zero federal tax allocation
   period: 2022
   absolute_error_margin: 0.01

policyengine_us/variables/gov/states/mt/tax/income/deductions/cdcc/mt_child_dependent_care_expense_deduction.py

@@ -42,7 +42,8 @@ def formula(person, period, parameters):
         # line 7 in their column; an unmarried filer enters all of it.
         married = person.tax_unit("tax_unit_married", period)
         head = person("is_tax_unit_head", period)
-        share = where(married, head_or_spouse * 0.5, head * 1.0)
+        p_itemized = parameters(period).gov.states.mt.tax.income.deductions.itemized
+        share = where(married, head_or_spouse * p_itemized.spouse_allocation_rate, head)
         # Married couples must file a joint return or file separately on the
         # same form (MCA 15-30-2131(1)(c)(vi)(A)); a spouse filing on a
         # separate form cannot take the deduction.

policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/federal_itemization/mt_itemized_deductions_for_federal_itemization_indiv.py

@@ -21,10 +21,12 @@ class mt_itemized_deductions_for_federal_itemization_indiv(Variable):
     defined_for = "mt_married_filing_separately_on_same_return_eligible"
 
     def formula(person, period, parameters):
-        p = parameters(period).gov.irs.deductions
+        p = parameters(period).gov.states.mt.tax.income.deductions.itemized
         # Since we only compute the federal charitable deduction at the tax unit level,
         # we will split the value between each spouse
-        charitable_deduction = person.tax_unit("charitable_deduction", period) * 0.5
+        charitable_deduction = (
+            person.tax_unit("charitable_deduction", period) * p.spouse_allocation_rate
+        )
         head_or_spouse = person("is_tax_unit_head_or_spouse", period)
         # The interest deduction is the sum of mortagage and investment interest expenses
         investment_interest = person("investment_interest_expense", period)