Count household members' income in Montana's elderly homeowner/renter credit

changelog.d/fix-mt-ehrc-household-member-income.fixed.md

@@ -0,0 +1 @@
+Count household members' income in the Montana elderly homeowner/renter credit: a tax unit dependent's gross income, and the income of household members who file their own returns.

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

@@ -0,0 +1 @@
+Montana's federal income tax deduction for spouses filing separately on the same form now attributes federal tax to the spouse who earned the income and caps each spouse at 5,000; the child and dependent care expense deduction phases out on the couple's combined Montana AGI and is halved only for spouses filing separately on the same form; and the elderly homeowner/renter credit counts income without regard to losses.

policyengine_us/parameters/gov/states/mt/tax/income/deductions/itemized/misc_deductions.yaml

@@ -1,8 +1,11 @@
 description: Montana counts these sources as miscellaneous deductions. 
+# The child and dependent care expense deduction is also a miscellaneous
+# deduction (Form 2 Itemized Deductions Schedule, line 14). It is added
+# separately because its income limit uses the return's own Montana AGI, which
+# differs between a joint return and separate columns (Form 2441-M line 3).
 values:
   2021-01-01:
-    - mt_child_dependent_care_expense_deduction  
-    - casualty_loss_deduction  
+    - casualty_loss_deduction
   2024-01-01: []
 
 metadata:

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit.yaml

@@ -223,3 +223,179 @@
     # Same household, larger exclusion ($12,600) leaves a smaller expected
     # contribution, so the credit is higher: $539.67.
     mt_elderly_homeowner_or_renter_credit: 539.67
+
+- name: 2023 Elderly Homeowner/Renter Credit Schedule worked case, a capital loss does not reduce gross household income
+  period: 2023
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        long_term_capital_gains: -3_000
+        social_security_retirement: 10_000
+        real_estate_taxes: 2_000
+        mt_refundable_credits_before_renter_credit: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_name: MT
+  output:
+    # Line 1 federal AGI 17_000 (Social Security untaxed: 17_000 + 5_000 is
+    # under the 25_000 base); line 5 untaxed Social Security 10_000; line 9
+    # losses 3_000; line 10 gross household income 30_000.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: 30_000
+    # Line 12 = 30_000 - 12_600 = 17_400; line 13 multiplier 0.05;
+    # line 14 = 870.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: 870
+    # Line 18 = 2_000; line 19 = 1_130; line 20 = min(1_130, 1_150);
+    # line 21 = 100% (under 35_000); line 22 = 1_130.
+    mt_elderly_homeowner_or_renter_credit: 1_130
+
+- name: 2024 Schedule 2EC worked case, a dependent's wages count toward gross household income
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        real_estate_taxes: 2_000
+      person2:
+        age: 16
+        employment_income: 10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # Line 5 pensions 20_000; line 17 other household members' income
+    # 10_000 (the dependent's wages); line 18 gross household income 30_000.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: [20_000, 10_000]
+    # Line 19 12_600; line 20 = 30_000 - 12_600 = 17_400; line 21 = 0.05;
+    # line 22 = 870.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [870, 0]
+    # Line 23 = 2_000; line 26 = 2_000; line 27 = 2_000 - 870 = 1_130;
+    # line 28 = min(1_130, 1_150) = 1_130; line 29 = 100% (line 18 is under
+    # 35_000); line 30 = 1_130. Without the dependent's wages, gross
+    # household income would be 20_000 and the credit the 1_150 cap.
+    mt_elderly_homeowner_or_renter_credit: [1_130, 0]
+
+- name: 2024 Schedule 2EC worked case, a household member filing their own return counts
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        real_estate_taxes: 2_000
+      person2:
+        age: 45
+        taxable_interest_income: 10_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+      tax_unit2:
+        members: [person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # The claimant's adult daughter lives in the household and files her
+    # own return. § 15-30-2337(7)(a): a household is "an association of
+    # persons who live in the same dwelling"; the 2024 instructions: "You do
+    # not need to be related to be in the same household." Line 5 = 20_000;
+    # line 17 = 10_000 (her interest); line 18 = 30_000; line 22 = 870;
+    # line 27 = 2_000 - 870 = 1_130; line 30 = 1_130. Her tax unit has no
+    # one aged 62 or older, so it claims nothing.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [870, 0]
+    mt_elderly_homeowner_or_renter_credit: [1_130, 0]
+
+- name: 2024 Schedule 2EC worked case, a dependent's wages move the credit into the 40 percent band
+  period: 2024
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        real_estate_taxes: 2_000
+      person2:
+        age: 17
+        employment_income: 16_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # Line 18 = 20_000 + 16_000 = 36_000; line 20 = 23_400; line 22 =
+    # 23_400 x 0.05 = 1_170; line 27 = 2_000 - 1_170 = 830; line 28 = 830;
+    # line 29 = 40% (36_000 is in the 35_000 to 37_500 band);
+    # line 30 = 830 x 0.4 = 332.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [1_170, 0]
+    mt_elderly_homeowner_or_renter_credit: [332, 0]
+
+- name: 2024 Schedule 2EC, a dependent's wages bring gross household income to 45,000
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        real_estate_taxes: 2_000
+      person2:
+        age: 17
+        employment_income: 25_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # Line 18 = 45_000. The claimant must have gross household income "less
+    # than $45,000"; line 29 = 0% at 45_000 and above.
+    mt_elderly_homeowner_or_renter_credit: [0, 0]
+
+- name: 2023 Elderly Homeowner/Renter Credit Schedule worked case, a non-filing dependent's wages count
+  period: 2023
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        real_estate_taxes: 2_000
+      person2:
+        age: 16
+        employment_income: 10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # Line 1 federal AGI 20_000 (the head's return). The dependent's 10_000
+    # of wages is under the 13_850 filing threshold for dependents; the
+    # 2023 instructions say members of the household not filing a Form 2 or
+    # federal Form 1040 "must report all wages" on line 8. Line 10 = 30_000;
+    # line 12 = 17_400; line 13 = 0.05; line 14 = 870; line 15 = 2_000;
+    # line 18 = 2_000; line 19 = 1_130; line 20 = 1_130; line 21 = 100%;
+    # line 22 = 1_130.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: [20_000, 10_000]
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [870, 0]
+    mt_elderly_homeowner_or_renter_credit: [1_130, 0]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit_gross_household_income.yaml

@@ -37,3 +37,126 @@
     # § 15-30-2337(9)(a)(viii) requires all SS to be counted, even the
     # portion excluded from federal AGI.
     mt_elderly_homeowner_or_renter_credit_gross_household_income: 30_000
+
+- name: A capital loss deducted in federal AGI is added back
+  period: 2023
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        long_term_capital_gains: -3_000
+        mt_refundable_credits_before_renter_credit: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_name: MT
+  output:
+    # § 15-30-2337(9)(a): federal AGI "without regard to loss". 2023 Elderly
+    # Homeowner/Renter Credit Schedule:
+    # line 1 federal AGI 20_000 - 3_000 = 17_000; line 9 adds back the 3_000
+    # capital loss; line 10 = 20_000.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: 20_000
+
+- name: A business loss deducted in federal AGI is added back once for the return
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+        mt_refundable_credits_before_renter_credit: 0
+      person2:
+        age: 68
+        self_employment_income: -5_000
+        mt_refundable_credits_before_renter_credit: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # Federal AGI 20_000 - 5_000 = 15_000; the 5_000 loss is added back, so
+    # gross household income is 20_000 (2024 Schedule 2EC line 18). Net household
+    # income: (20_000 - 12_600) * 0.035 = 259, allocated to the head.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [259, 0]
+
+- name: A dependent's wages count in gross household income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_pension_income: 20_000
+      person2:
+        age: 16
+        employment_income: 10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # § 15-30-2337(4): "all income received by all individuals of a
+    # household". The dependent's wages are on their own return, not in the
+    # head's federal AGI. 2024 Schedule 2EC: line 5 pensions 20_000 (head);
+    # line 17 income of other household members 10_000 (dependent's wages);
+    # line 18 gross household income 30_000.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: [20_000, 10_000]
+
+- name: A dependent's Social Security counts once, in full
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 70
+      person2:
+        age: 17
+        employment_income: 25_000
+        social_security_survivors: 10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # On the dependent's own return, provisional income is
+    # 25_000 + 10_000 / 2 = 30_000, so 50% x (30_000 - 25_000) = 2_500 of the
+    # benefits is taxable (IRC 86) and is part of dependent_gross_income.
+    dependent_taxable_social_security: [0, 2_500]
+    # § 15-30-2337(9)(a)(viii) counts all Social Security, and 2024
+    # Schedule 2EC line 6 takes "the total taxable and nontaxable" benefits:
+    # wages 25_000 + Social Security 10_000 = 35_000, not 37_500.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: [0, 35_000]
+
+- name: A dependent's capital loss does not reduce gross household income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 70
+      person2:
+        age: 16
+        employment_income: 10_000
+        long_term_capital_gains: -3_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_name: MT
+  output:
+    # § 15-30-2337(9)(a): income "without regard to loss". 2024 Schedule 2EC
+    # line 7: "do not include any capital losses". Wages 10_000 count; the
+    # 3_000 loss does not reduce them.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: [0, 10_000]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit_net_household_income.yaml

@@ -40,3 +40,29 @@
   output:
     # (48,000 - 6,300) x 0.05 with the 2021 exclusion of $6,300.
     mt_elderly_homeowner_or_renter_credit_net_household_income: [2_085, 0]
+
+- name: Gross household income includes members outside the claimant's tax unit
+  period: 2024
+  input:
+    people:
+      person1:
+        mt_elderly_homeowner_or_renter_credit_gross_household_income: 20_000
+        mt_elderly_homeowner_or_renter_credit_eligible: true
+      person2:
+        mt_elderly_homeowner_or_renter_credit_gross_household_income: 10_000
+        mt_elderly_homeowner_or_renter_credit_eligible: false
+    tax_units:
+      tax_unit1:
+        members: [person1]
+      tax_unit2:
+        members: [person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # 2024 Schedule 2EC line 18 = 20_000 + 10_000 (line 17, the other member)
+    # = 30_000; line 20 = 30_000 - 12_600 = 17_400; line 21 = 0.05;
+    # line 22 = 870, on the claimant's row. person2's tax unit has no
+    # claimant, so 0.
+    mt_elderly_homeowner_or_renter_credit_net_household_income: [870, 0]